SunSirs: High Level Consolidation of China Domestic Methanol Market in February

According to the Commodity Market Analysis System of SunSirs, the domestic methanol market has been at a high level. From February 1st to 29th (as of 3:00 pm), the average price of methanol at East China ports in the domestic methanol market increased from 2,561 RMB/ton to 2,730 RMB/ton, with a price increase of 6.57% during the cycle and a year-on-year decrease of 0.49%.

The domestic methanol market showed certain differences in February. Before the Spring Festival, some methanol production enterprises had storage and discharge demand, but due to the impact of heavy snow weather, shipments were restricted. As the Spring Festival approached, downstream demand weakened significantly, and the overall market was mainly weak; After the Spring Festival, the inventory of methanol enterprises has significantly accumulated, leading to a decrease in inventory demand. However, the downstream recovery is relatively slow, and the market continues to weaken under supply pressure. However, subsequently, driven by high port prices, the market's shipment intensity has been supported, and the domestic methanol market inventory has shown a strong trend.

As of the close of February 29th, the closing price of methanol futures on the Zhengzhou Commodity Exchange has fallen. The main contract of methanol futures, 2405, opened at 2,535 RMB/ton, with a highest price of 2,542 RMB/ton and a lowest price of 2,490 RMB/ton. It closed at 2,504 RMB/ton at the end of the trading day, a decrease of 17% or 0.67% compared to the previous trading day's settlement. The trading volume was 1,017,577 lots, and the position was 879,744 lots, with a daily increase of 56,533.

In terms of cost and supply, in the short term, the supply will continue to show a tightening trend combined with resonance from rainy and snowy weather, and downstream procurement demand will be released in stages, resulting in a phased increase in coal prices. However, as coal mines resume work comprehensively in the later stage, the impact of extreme weather will weaken, and supply and demand will recover, and the market will return to a weak and stable trend. The cost of methanol is mixed.

On the demand side, downstream chlorides: Mainstream factories in South China are operating at reduced loads, resulting in reduced demand for chlorides; Downstream dimethyl ether: Hebei Jichun and Lankao Huitong units have planned to operate, resulting in an increase in demand for dimethyl ether; Downstream formaldehyde: The formaldehyde plants of Binzhou Hengyun, Guanghan HuaRMB, and Hengying Chemical have restarted, and the expected start-up of Lankaohui Tongcun has led to an increase in formaldehyde demand; Downstream MTBE: Shandong Chengtai has a construction plan, resulting in an increase in MTBE demand; Downstream acetic acid: With the restart and recovery of Yankuang's large plant, the demand for acetic acid has increased. The impact of methanol demand is mixed.

On the supply side, there were a total of 4 methanol units undergoing maintenance starting in February, a decrease of 9 compared to January. The maintenance involved a total production capacity of 2.58 million tons per year, a decrease of 4.66 million tons per year compared to January; At the same time, a total of 6 methanol units were restored in February, involving a total production capacity of 4.3 million tons per year. The supply side of methanol is affected by bearish factors.

In terms of external trading, as of the close on February 29th, the closing price of methanol in the CFR Southeast Asian methanol market was $353.00-354.00 per ton, a decrease of $1 per ton. The closing price of methanol in the US Gulf methanol market is 103.00-104.00 cents per gallon; The closing price of the FOB Rotterdam methanol market is 327.00-328.00 euros/ton, up 0.5 euros/ton.

Future predictions suggest that coal may have relatively limited support for methanol production costs. The traditional downstream demand side will be improved. The methanol analyst from SunSirs predicts that the short-term domestic methanol market price consolidation will be the main focus.

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