test


Member ID:
Password: 
Stay logged in for 30 days
Forget Your Password?
close

login CCFGroup App

Insight | Time: Jul 31 2019 11:07AM
Is methanol market coming to an inflection point?
 
Text size


After a slump in Sep methanol futures contract, actively-traded September contract on the
Zhengzhou Commodity Exchange increased 24yuan/mt to close at 2,081yuan/mt Tuesday. However, does it necessarily mean an inflection point for China’s methanol market?

We doubt it.

As we know, the slump of methanol price was caused by worsening supply and demand fundamentals. The market could only rebound substantially if there’re positive supports, but is there any? Some would think that high cost, as well as MTO plant restarts are supportive. It is true, yet it is still too early to jump to a conclusion.

The cost for methanol production based on coal in Northwest China can be generally calculated at 1,700-1,800yuan/mt, while inland methanol price is currently staying at around 1,600yuan/mt ex-works. With a loss of 100-200yuan/mt, domestic producers are reluctant to reduce price further, but the loss is not unacceptable and not large enough to force plants to shut down. On the one hand, the cost underpins the market, and on the other, product inventory is still high, adverse to the market.

In terms of MTO plant, Jiutai Energy has restarted its 600kt/yr MTO plant on Jul 29, and Shenhua Yulin is expected to restart its 600kt/yr MTO plant in the first half of Aug after a 15-day maintenance. Meanwhile, Sailboat plans to shut is 833kt/yr MTO plant on Jul 31 for 15 days, Yangmei Hengtong also has maintenance schedule in near term, Yan’an Energy and Chemical’s 600kt/yr MTO plant is expected to start maintenance in the end of Aug, Shenhua Xinjiang’s 600kt/yr plant is anticipated to shut in end-Aug for maintenance, and also Shenhua Baotou’s 600kt/yr MTO plant may start maintenance in mid-Sep. The combined capacity of MTO plants with upcoming shutdown schedules is much larger than than of restarted ones.

In terms of upcoming new MTO plant, there’re three which could come online in Aug, i.e. Ningxia Baofeng’s second 600kt/yr plant, Luxi Chemical’s 300kt/yr plant and Zhong’an United Coal Chemical’s 700kt/yr plant. However, the startups could get postponed, and the expectation of supports to methanol market may not materialize until Sep.

In a conclusion, methanol market could see shot term rebounds but it is still too early for a reverse in the trend.
[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
Related Articles
ZCE May methanol futures contract closes 2.14% lower
Offers for spot methanol raised
Methanol tank inventory in South China main ports (Jan 16, 2020)
Methanol tank inventory in East China main ports (Jan 16, 2020)
ZCE May methanol futures contract opens 6 lower
Methanol market daily (Jan 16, 2020)
ZCE May methanol futures contract closes 1.11% lower
Spot methanol holds steady
ZCE May methanol futures contract opens 1 lower
Methanol market daily (Jan 15, 2020)
 
Research
2020 MEG market outlook and trading risk management
2019 polyester market operation & 2020 forecast
Review and brief outlook on acrylic market
2019 state cotton reserves sales structure analysis
China PET bottle chip supply demand change and future trend
Operation and development of virgin PSF and recycled PSF
 
 

浙公网安备33010902000742号