Supply is tight, and methanol "silver ten" continues to rise

Since September, the domestic methanol market has opened a unilateral sharp rise mode
under the influence of factors such as the decline in imports and low port inventories.
On October 10, the average price of methanol in the market was 3060 yuan (ton price, the same below), up 21.
04% from the beginning of September and 28.
84%
from the beginning of the year.
For the future market, industry insiders predict that under the expectation of tight supply and demand pattern and strong cost support, the methanol market will continue to rise in the short term
.

Monthly gains hit new highs

According to the monitoring data of the business agency, the average price of methanol in the market on September 30 was 3,012 yuan, up 19.
17% from the beginning of
the month.
"The recent shrinkage of import sources, coupled with the active downstream replenishment on the eve of the National Day, has led to a sharp decline in market inventories and port inventories approaching historical
lows.
" In the view of Lang Yi, a methanol distributor in Liaoning, tight supply is the main factor
driving the unilateral rise of the domestic methanol market in September.

From a macro perspective, with the outbreak of the energy crisis in Europe in September, the strong trend of crude oil drove the overall upward trend of the chemical commodity market, and the methanol market also benefited
.
From the perspective of supply and demand in the methanol market, the supply of external orders shrank in September, and the arrival volume was 904,100 tons, down 11.
16%
from the previous month.
In addition, due to the impact of typhoons, the overall supply of the port has tightened significantly
.
At the same time, a large olefin factory increased its purchase, and some of the port sources of goods were transferred to the terminal, resulting in a further tightening of the amount of socially negotiable goods and promoting the methanol
market.

After entering late September, although international crude oil prices were volatile and downward, coal prices were firm, supporting them from the cost side
.
On September 20~30, the average price of East China port in the domestic methanol market rose from 2710 yuan to 3012.
50 yuan, an increase of 11.
16%.

Medium-term supply and demand are tight

For the future trend, Zhou Tao, an analyst at Zhongyuan Futures, believes that the methanol market is in sufficient supply in
the short term.
However, a supply shortage in the medium term, coupled with signs of warming in the traditional downstream, is expected to support
the methanol market higher.

Zhou Tao believes that there is no equipment maintenance plan to flow out in the short term, and most of the pre-maintenance equipment is concentrated in mid-to-late October
.
At the same time, there is also a release of new production capacity in the northwest region, and the supply of methanol is expected to
increase.
However, considering the impact of factors such as transportation restrictions caused by the recent local epidemic, there is uncertainty
about the actual commissioning of maintenance and new production capacity.

In the medium term, as the weather turns colder, the supply of raw materials for natural gas to methanol plants has declined significantly
.
Due to the intensification of the Russian-Ukrainian conflict, the price of natural gas in Europe has risen sharply, some units have to be stopped due to losses, and some units have reduced their load
.
Methanol costs in Europe are strongly supported and prices remain high
.
Affected by the appreciation of the US dollar and the strong external price, the arrival of methanol in Hong Kong may continue to decline
.

On the demand side, Zhou Tao believes that although the traditional downstream profits of methanol are small or even in a state of loss, demand will improve
due to the arrival of the peak consumption season.

Specifically, the recent increase in formaldehyde factory orders, while the manufacturer's high-price sales were accepted downstream, the company's shipments were smooth, and the inventory was low; The operating rate of glacial acetic acid plants has declined, and the tight supply in stages has rebounded the price of glacial acetic acid, so the overall demand for glacial acetic acid is stable
.

In addition, Jiangsu Sirbon 800,000 tons/year and Changzhou Fude 300,000 tons/year methanol to olefin plants have start-up plans
.
In the medium term of tight supply, stable demand side performance will drive the methanol market to the upside
.

Cost support is firm

From the perspective of the fourth quarter, both coal prices and international oil prices will continue to operate at a high level, forming cost support
for the methanol market.

According to Lang Yi, among the main process routes of domestic methanol production, the proportion of coal-to-methanol process is absolutely dominant, and nearly 80% of methanol production capacity in 2021 comes from coal-to-methanol plants
.
With the arrival of the heating season, coal prices are expected to rise and fall
in the fourth quarter.
Combined with the uncertainty of the European energy crisis, energy prices are expected to rise and coal prices are expected to fluctuate at high levels, thereby supporting the methanol market
.

The international market is dominated
by the natural gas to methanol process route.
Recently, OPEC+ decided to cut total oil production by an average of 2 million barrels per day from November 2022, and the production cut agreement will be extended until the end of
December 2023.
This has formed a strong support for oil prices, thereby driving the natural gas market upward and providing certain support
to the methanol market on the cost side.

From the perspective of the main process routes of olefin preparation, the oil-to-olefin route and coal and methanol to olefin accounted for the highest
proportion.
When the price of crude oil rises, coal-to-olefins may reflect cost advantages, which will be positive
for the methanol market.

Lang Yi and other industry insiders believe that in the future, because of OPEC+'s new production reduction agreement and new changes in the international political situation, international crude oil prices have risen significantly, forming a strong support
for chemicals such as methanol.
At the same time, the expectation of restarting downstream olefin production capacity will support
methanol prices.