SunSirs: Domestic Methanol Market Rose and then Fell in August

1. Price Trend

According to the price monitoring of SunSirs, the average domestic methanol price was 1,970 RMB/ton at the beginning of the month and 1,994RMB/ton at the end of the month. The average domestic methanol price rose by 1.22% and the maximum amplitude was 12.89%. The price fell by 2.52% compared with the same period last year.

2. Market Analysis

Products: Domestic methanol mainland market rebounded in the first half of August, and returned to the downward in the second half of August. The Shandong market rebounded first in the first half of August due to the centralized equipment maintenance and downstream periodic reserve, with an increase of 200RMB/ton. In the second half of August, supply increased and futures declined, and the methanol market fell rapidly. The harbor shocks were narrow, stable in the first half of that month and weak in later days. For newly built Methanol to Olefins in China, The Jiutai Inner Mongolia MTO load of 600,000 tons/year in Inner Mongolia, and Nanjing Chengzhi Phase II of 600,000 tons/year maintained as earlier period, while the polypropylene and polyethylene were dimerized by the MTO load (with a capacity of 1.8 million tons/year) of Zhongan United Coal Chemical Co., Ltd in the first half of August.

Industry chain: formaldehyde: This month, the formaldehyde market rose narrowly compared in July. Affected by the upstream methanol market, the formaldehyde market rose narrowly in the early and middle of that month, but the downstream demand was low and actual trade was small. After the mid-term, the upstream methanol market began to decline, but the downstream market started to improve slightly, combined with the overall low start of the formaldehyde market, low market supply and rising downstream demand, formaldehyde enterprises offer stable, good profit margin, but the overall transaction has not yet reached an ideal state. In September, under the influence of environmental protection policy, the formaldehyde and downstream market will start or be limited, and the cost side has fallen to a relatively low level. It is expected that the formaldehyde market will oscillate lower in early September.

Dimethyl ether: In August, domestic dimethyl ether market prices rose and fell. At the beginning of the month, due to the relatively high profit of dimethyl ether, the enterprises started production. The increase in the market supply of goods has led to a shortage of prices and signs of decline, while And the market turnover is not enough. In order to avoid further price declines, enterprises limited sales, and promote the price to rise. Since middle August, the market has continued to fall into a weak situation due to small demand. In order to avoid the price decline, Xinlianxin company began to implement a bottom-keeping policy, thus protecting the market price side by side. However, with the rising price of raw material methanol, the profit margin of enterprises is gradually narrowed, so the cost factors promote the overall rise of dimethyl ether prices. In the situation of dimethyl ether price rising continuously and narrowly, some shortage traders began to purchase on demand, but did not cause a large-scale incremental trading in the market. The overall performance was general, and prices fell negatively. After August 20, Dimethyl ether (DME) trading was in a downturn, even if mainstream enterprises intervened in the market by policy, the impact is limited. Xinlianxin company had implemented multiple bottom-guaranteed policies during the month. After the settlement price was announced, the price has risen slightly. However, due to the negative impact of the market, it is difficult for prices to rise.

Acetic acid: The domestic acetic acid market has risen sharply this month, with a rise of 650 RMB/ton in Jiangsu provice and 700 RMB/ton in North China. In view of the sustained bullish mood in the latter period, the acetic acid export orders increased significantly in August. Due to parking and maintenance of Malaysia BP and Singapore Celanese in later period, the domestic supply of acetic acid was good, which made domestic acetic acid market short of supply and demand. Considering the substantive digestion of downstream, supplier's increase was mainly rational.

Industry: According to the price monitoring of SunSirs, in August 2019, there were five kinds of commodities rising in the energy sector, one of which increased more than 5%, accounting for 6.3% of the monitored commodities in the sector. The top three commodities were MTBE (8.16%), gasoline (2.24%) and methanol (1.22%). There were eleven kinds of commodities falling annually, with four commodities falling by more than 5%, accounting for 25% of the monitored commodities in the sector; the first three products falling are dimethyl ether (-9.03%), liquefied natural gas (-7.08%) and Brent crude oil (-6.28%). This month's average rise and fall was -1.52%.

3. Market Forecast

SunSirs’ view: On the positive side, methanol in the mainland continued to decline in late August, with local market prices falling to the production cost of methanol plants; new methanol-to-olefin plants were put into operation one after another, and MTO load of Nanjing Chengzhi Phase II was not high; production time of Shandong Luxi and Ningxia Baofeng was delayed; with the successive restoration of the olefin units, such as Ningbo Fude, Shenhua Yulin and so on, the olefin start-up has been restored.

On the negative side, the arrival of methanol at the port was concentrated, with an estimated arrival of more than 1 million tons in August and 900,000 to 950,000 tons in September. In the orderly construction of new methanol units in China, 700,000 tons in Yankuang Yulin are planned to be put into operation in October; Rongxin of Inner Mongolia is expected to put into operation in September; Yingde of Jingmen in late August.

Near National Day, environmental protection supervision in North China has been strengthened, and formaldehyde trade unions in North China are expected to decline in September. With the concentrated release of bad news such as high inventory of methanol ports, abundant inventory in the mainland and weak downstream traditional demand, the relative supply-over-demand pattern of methanol has not changed. SunSirs’ Methanol analysts predict that the short-term domestic methanol market will continue to be vulnerable to shocks. With the advent of National Day, environmental protection and safety inspections in the north are rigorous, and information about the policy of production restriction needs to be paid attention to.

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