The sudden outbreak of the epidemic at the beginning of the year and the plunge in crude oil caused a shock to the methanol market. With the continuous expansion of domestic production capacity, the staggered outbreak of epidemics at home and abroad caused a large influx of international supplies into the country. The supply and demand market was severely imbalanced. In the first half of the year, almost all methanol producers in China suffered losses. The operating pressure in Northwest China fell below 60 in July, the lowest since 2016. Since August, inventory has decreased slightly, MTO start load has increased, and the marginal supply and demand of fundamentals have slightly improved, but it is difficult to reverse the oversupply situation caused by long-term accumulation. High port inventory and a large number of imported sources still suppress price increases, and the demand side depends solely on olefins Support growth is weak, and the short-term market will maintain bottom oscillation.
Plant resumed production and started more
Entering August, the peak period for the maintenance of domestic methanol plants has passed. The operating rate in Northwest China increased by 10.02% from the previous week. As of August 13, the overall operating load rate of domestic methanol plants was 70.21%, and the operating load in Northwest China was 82.36%. . The peak period of domestic equipment maintenance has passed, and the start-up level has gradually returned to the level before the epidemic. The methanol plants in some parts of the northwest are operating at full capacity, and some plants in Shandong and Hebei are operating stably to produce products. The overall domestic supply will gradually increase. In addition, the new supply of methanol may affect the rising rhythm. 2020 is still a year for methanol production capacity expansion. It is planned to invest about 9.21 million tons of new capacity throughout the year. In the first half of the year, about 4.4 million tons of domestic installations were put into production. The new capacity expansion plan during the year was not affected by the epidemic, and the degree of fulfillment was high. Among them, Ningxia Baofeng Phase II 2.2 million tons/year and Inner Mongolia Rongxin Phase II 900,000 tons/year have a greater impact on supply. In the second half of the year, 4.81 million tons of production capacity are expected to be put into production. Specifically, most of the new methanol plants are coal-to-methanol processes. Affected by the continued sluggish profits of upstream methanol production, some areas are not even able to cover the cash flow cost. The possibility of companies delaying part of the production plan is not ruled out, but even if it is postponed, consider With the incremental supply brought about by new installations to the external disk, the marginal supply is still showing an upward trend.
In early August, the East China port inventory declined slightly, but the overall level is still at a historical high. As of August 13, the methanol inventory in the coastal areas of East China and South China was 1.3083 million tons, and the tradable supply was estimated to be 358,000 tons, of which the Jiangsu inventory was 787,000. Tons, much higher than the five-year average of 495,000 tons, and there was no obvious turning point in depots this month. Affected by Typhoon Hagupit in the early stage, the arrival and unloading time of cargoes has been delayed. In the second half of this month, the arrival volume of China's methanol import cargoes is estimated to be 690,000-700,000 tons. On the whole, the starting load has been restored to the same period in previous years, and there are still plans to resume production and start of installations in the future, and the subsequent supply of goods to Hong Kong will continue to rise.
Weak demand growth
The current demand side mainly relies on olefin support, and the traditional demand start load is adjusted within a narrow range. As of August 13, the average operating load rate of domestic methanol-to-olefin plants was 85.74%, of which the average load of external methanol MTO plants was 97.51%, which was basically the same as at the beginning of the month. The few MTO plants in the northwest have increased slightly, which supports methanol demand to a certain extent. In terms of traditional demand, as of August 13, the traditional downstream weighted operating rate was 43.3%, of which the operating rate of formaldehyde was 20.78%, the operating rate of dimethyl ether was 18.37%, the operating rate of MTBE was 54.49%, and the operating rate of acetic acid was 77.46%. The DMF operating rate was 39.29%. The start of formaldehyde may be affected by environmental protection inspections and climate factors in Shandong. Acetic acid was affected by the temporary overhaul of the glacial acetic acid plant in Shandong Yankuang. The start of operation fell by 5.63 percentage points month-on-month. The decline was significant. The start of dimethyl ether, MTBE, and methylal basically started. Same as last week. At present, olefin plants are almost operating at full capacity, and there is limited room for growth in emerging demand. The next increase in methanol demand is likely to come from traditional demand. However, the current downstream market mostly maintains rigid demand purchases, and the overall performance is relatively flat. Before the arrival of the golden nine silver ten, the traditional demand side The lack of positive stimulus is difficult to have a substantial impact on the growth of methanol demand.
In summary, the current methanol fundamentals are still in a pattern of imbalance between supply and demand, and the role of cost support continues to be prominent. On the supply side, the pre-maintenance equipment resumed work and production. East China port inventory declined slightly from the beginning of the month, but the overall inventory level is still high. There is no obvious turning point in destocking recently. Overlapped with the supply of overseas imported goods, medium and long-term supply pressures continue unabated. The improvement on the demand side is mainly due to MTO. Traditional demand performance is flat and there are no bright spots. The current recovery speed on the demand side is not enough to drive a continuous callback, and subsequent growth is weak. On the whole, the methanol market is weak, and the short-term continued weak oscillation, it is appropriate to wait and see in the short term.
Source: Chemical Network
