Forecast for the domestic methanol market trend in 2017
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Forecast for the domestic methanol market in 2017 http://www.chemcp.com December 30, 2016, China Chemical Products Network. The supply-and-demand balance in the domestic methanol market in 2017 will be centered on the East China region, with particular attention paid to the balance between the increased demand for olefins in that region and the increased imports, which serve as important sources of supply. Under this main theme, our forecast for methanol in 2017 is that there will be a timing difference between supply and demand, with methanol possibly showing strength first before weakening. The main logic is that in the first half of 2017, increased production of MTO led to a significant rise in demand, while supply growth was relatively limited. In the second half of the year, as new methanol production facilities came online in North America and Iran, additional supplies of methanol from abroad began to arrive in China. This increase in supply will help alleviate the tight supply situation for methanol in the domestic market, thereby facilitating a return to balance in the market. Demand recovery remains focused on olefins. In 2017, although new olefin production capacity amounted to 6 million tons, when taking into account integrated plants and those with uncertain commissioning timelines, the olefin plants that rely on external supply include Jiangsu Sierbang and Changzhou Fude in the East China region. Originally, these two sets of equipment were scheduled to go into operation in 2016, but construction was delayed for various reasons. But whether it goes into operation in December this year or January next year, its real impact will be felt throughout 2017. We estimate that Changzhou Fude has a production capacity of 330,000 tons, while Jiangsu Shenghong has a capacity of 833,000 tons. If both facilities are operated at full capacity, the total annual amount of methanol that needs to be purchased from external sources would be nearly 3.5 million tons. If they operate at only 70% of their capacity in the first year of operation, the annual demand would be 2.44 million tons. Compared to the current annual demand of over 12 million tons in East China, this represents roughly 20% of that demand. It is said that olefins are both the cause of success and the cause of failure. Although the rapid rise in methanol prices before the end of the year has also driven up PP prices, the profits of olefin plants remain unsatisfactory. Since December, the profits associated with PP markets, propylene production in East China, and MTO plants in East China have all turned into losses, with the extent of these losses continuing to increase. And once profits fall below the \"pain threshold\" that companies can tolerate, it will surely affect demand for methanol and inevitably limit its price increases. Supply is on the rise and demand from overseas markets is expected. The methanol market has now shifted away from the previous situation of overcapacity, moving toward a balance between supply and demand; by the end of 2016, there was even a shortage of supply. In terms of capacity growth, it seems that 2017 will once again see a high level of new capacity additions, but in reality, what was put into operation in large numbers in 2017 were integrated facilities for producing olefins from coal through methanol. In 2017, over 15 million tons of methanol production capacity was brought online, but only 3.17 million tons of this methanol did not have corresponding downstream applications. After excluding the capacity whose commissioning was highly unlikely, it was only 1.27 million tons of methanol that had a real impact on the market; therefore, the actual increase in production capacity in 2017 was not significant. At the same time, there is also limited room for an increase in domestic production capacity; in 2016, the average national production level remained at 67%. Even when production profits were high towards the end of the year, production levels stayed at this same level, indicating poor supply elasticity in the domestic market. In 2017, environmental pressures will remain inevitable; production capacity in the western regions may see some improvement, but the extent of such improvement will be limited. Given the regional price differences, it is expected that the amount of gas exported to East China will remain limited as well. With insufficient methanol exports from the mainland, many companies in the East China market have turned to the import market. However, the increase in international methanol production in 2017 was mainly due to about 2.66 million tons produced in Iran during the second half of the year, as well as 1.75 million tons from three new production units that began operating only towards the end of the year in the United States; there was limited increase in production during the first half of the year. From a global supply and demand perspective, there is a timing difference in the supply and demand dynamics of the methanol market: it is tight in the first half of the year, while the situation improves or even becomes relaxed in the second half.
Analysis of methanol price trends as of December 30, 2016: http://www.chemcp.com. As of December 30, 2016, according to China Chemical Products Network, the prevailing retail prices for enterprises in southern Shandong are between 2800–2830 yuan per ton; traders offering delivery to Linyi without invoices quote around 2770 yuan per ton. Market trading is acceptable for now. In Hubei region, the prevailing negotiation price is 2,850–2,950 yuan per ton; this refers to the factory prices offered by major manufacturers for lower-end products, while higher-end products have prices quoted by traders in Wuhan ； In the Hunan region, the prevailing negotiation price is between 2,950 and 2,980 yuan per ton; manufacturers have suspended providing quotes, with most prices coming from traders in Changsha. There is a strong atmosphere of caution in the market. The methanol market in the Two Lakes region is largely stagnant. The methanol market in the southwest region remains stable; the main selling price for manufacturers in Sichuan and Chongqing is around 2,800–2,850 yuan per ton, with most manufacturers adhering to their contract terms ； Affected by the surrounding market conditions, major suppliers in Sichuan and Chongqing are charging around 2850–2880 yuan per ton including taxes for deliveries, as demand from downstream markets is weak. The prevailing selling price for methanol produced from coal and coke oven gas in Heilongjiang is around 2,650–2,700 yuan per ton, with sales primarily directed at the local market and Jilin ； Affected by Tangshan, major traders are quoting prices of around 2,950–3,000 yuan per ton for goods delivered to Liaoning. The methanol market in the Northeast region is mainly characterized by stability. The price of methanol at Taicang port in Jiangsu is 3100–3130 yuan per ton, subject to negotiation ； In the morning, there were sporadic transactions in Taicang at around 3100–3120 yuan per ton ； The prevailing transaction/offer prices in Nantong are around 3,160–3,200 yuan per ton, while in Jiangyin and Changzhou they are around 3,180–3,200 yuan per ton ； The quoted price for methanol by the main suppliers at Ningbo Port is 3,240–3,250 yuan per ton; no deals have been reported so far. The methanol market in South China has seen a slight decline. As of the time of writing, the prevailing price for methanol at ports in Guangdong is between 2,980 and 2,990 yuan per ton. There were a few transactions in the morning at around 2,970–2,980 yuan per ton, with limited trading activity in the market. The methanol market in Fujian remains relatively stable; major companies are offering prices of 3,150–3,250 yuan per ton, while the actual prices are lower. Sellers at the Quangang and Xiamen ports are quoting prices of 3,100–3,150 yuan per ton, but trading volume is low. The ex-plant price of methanol from the major producers in the southern and southeastern parts of Shanxi Province ranges from 2,500 to 2,600 yuan per ton. The plant in Jincheng is operating stably, with a quoted price of 2,650 yuan per ton ； The spot price for shipments in Linfen is around 2,500–2,560 yuan per ton, while in Changzhi it is around 2,570–2,590 yuan per ton. Market activity has been moderate recently. The methanol market in Hebei remains stable. As of the time of writing, the selling price for enterprises in Shijiazhuang and its surrounding areas is around 2,660–2,770 yuan per ton, while the price for goods sold through trading channels is between 2,660–2,760 yuan per ton. There are no available prices for the Wen’an area, and trading activity there is minimal. In Tangshan, the prevailing selling price is around 2,850–2,880 yuan per ton. Overall, trading activity in the market is relatively low. The methanol market in Hebei remains stable. As of the time of writing, the selling price for enterprises in Shijiazhuang and its surrounding areas is around 2,660–2,770 yuan per ton, while the price for goods sold through trading channels is between 2,660–2,760 yuan per ton. There are no available prices for the Wen’an area, and trading activity there is minimal. In Tangshan, the prevailing selling price is around 2,850–2,880 yuan per ton. Overall, trading activity in the market is relatively low. In the Anhui region, the price is around 2,930–2,950 yuan per ton. The dynamic methanol market remains stable; major companies are operating normally and focusing on contract fulfillment, with a strong atmosphere of caution among market participants. The current outlet price for methanol at Taicang ports in Jiangsu, or the price subject to negotiation, is around 3,130 yuan per ton ； The price in Nantong is around 3,150–3,200 yuan per ton, while in Changzhou and Jiangyin it is 3,180–3,220 yuan per ton; no deals have been concluded as of yet ； The large-scale sell orders in December were at 3,130 yuan per ton ； In January, the price for large-scale sell orders was 3,090 yuan per ton, while the price for buy orders was 3,020 yuan per ton ； In February, the price for large-scale sell orders was 2,960 yuan per ton, while the price for buy orders was 2,900 yuan per ton ； The main suppliers at Ningbo Port are quoting 3,240–3,250 yuan per ton for methanol; no deals have been reported so far.
Let’s wait and see what the oil prices will be like next year... By the end of next year, oil prices are likely to reach 80 dollars per barrel
Methanol prices as of December 30, 2016: http://www.chemcp.com. As of December 30, 2016, according to China Chemical Products Network:
| Company/Region | Grade, Specifications, Purity, Price, Notes |
|-----------------|------------------------------------|
| Shandong Mingshui Dahuahua | Industrial grade, 99.9%; price: 2,840, cash payment |
| Shanxi Datuhe Coking | Industrial grade, 99.9%; quoted price: 2,600 |
| Daqing Oilfield | Industrial grade, 99.9%; price: 3,000, ex-factory price |
| Heilongjiang China Coal Longhua | Industrial grade, 99.9%; quoted price: 3,050 |
| Hebei Dingzhou Tianlu New Energy | Industrial grade, 99.9%; quoted price: 2,980 |
| Hebei Zhengyuan Chemical | Industrial grade, 99.9%; quoted price: 2,780, payable by acceptance |
| Shanxi Yangmei Fengxi | Industrial grade, 99.9%; delivery is satisfactory |
| Shandong Lianmeng | Industrial grade, 99.9%; quoted price: 2,840, cash payment |
| Inner Mongolia Shenhua Mengxiya | Industrial grade, 99.9%; external quoted price: 2,260 |
| Henan Xinlianxin | Industrial grade, 99.9%; quoted price: 2,850 |
| Heilongjiang Baotailong Coal | Industrial grade, 99.9%; quoted price: 3,100 |
| Heilongjiang Qitaihe Jiwei | Industrial grade, 99.9%; quoted price: 2,800 |
| Heilongjiang Yidaxin | Industrial grade, 99.9%; quoted price: 2,600 |
| Shanxi Coking | Industrial grade, 99.9%; quoted price: 2,550 |
| Shanxi Jiantao Wansinda | Industrial grade, 99.9%; quoted price: 2,650 |
| Heilongjiang Jianlong Steel | Industrial grade, 99.9%; ex-factory price: 2,750 |
| Sichuan Dazhou Steel | Industrial grade, 99.9%; price: 0; not for export at present |
| Chongqing Wansheng | Methanol; price: -2,900; not available for export yet |
| Hubei Sanning | Industrial grade, 99.9%; price: 2,900; some products are for internal use |
| Shandong Binzhou Xintianyang | Methanol; price: -2,900 |
| Sichuan Chuanwei | Industrial grade, 99.9%; quoted price: 2,950 |
| Dalian Dahuahua | Methanol; grade: -99.9%; price: 3,000; sold only locally |
| Shandong Yankuang Group | Industrial grade, 99.9%; normal delivery |
| Jiangsu Hengsheng | Industrial grade, 99.9%; quoted price: 2,910 |
| Jiangsu Yizhou Coal Coking | Industrial grade, 99.9%; quoted price: 2,900 |
| Shaanxi Weihe Chemical | Methanol; price: -2,750; local pricing |
| Shandong Linyi Hengchang | Industrial grade, 99.9%; normal delivery |
| Shanxi Anze Yongxin | Industrial grade, 99.9%; quoted price: 2,630 |
| Henan Hebi Coal Power | Industrial grade, 99.9%; quoted price: 2,300 |
| Anhui Haoyuan | Industrial grade, 99.9%; ex-factory price, payable by acceptance |
| Guizhou Jinchili Chemical | Industrial grade, 99.9%; quoted price: 3,100 |
| Shandong Xinneng Phoenix | Industrial grade, 99.9%; stable delivery |
| Shandong Tengzhou Shenglong | Industrial grade, 99.9%; ex-factory price: 2,840 |
| Hebei Shijiazhuang Jinshi | Industrial grade, 99.9%; quoted price: 2,790 |
| Shanxi Jiantao Lubao | Industrial grade, 99.9%; quoted price: 2,700 |
| Hunan Yihua | Industrial grade, 99.9%; price: 0; stable supply |
| Cangzhou China Railway Coking | Industrial grade, 99.9%; ex-factory price: 2,880 |
| Shanxi Jinfeng | Industrial grade, 88%; price: 2,700; ex-factory price, payable by acceptance |
| Anhui Linquan | Industrial grade, 99.9%; quoted price: 2,980, payable by acceptance |
| Shaanxi Heimao Coking | Industrial grade, 99.9%; quoted price: 2,600 |
| Company/Region | Grade, Specifications, Purity, Price, Notes |
|-----------------|------------------------------------|
| Shandong Mingshui Dahuahua | Industrial grade, 99.9%; price: 2,840, cash payment |
| Shanxi Datuhe Coking | Industrial grade, 99.9%; quoted price: 2,600 |
| Daqing Oilfield | Industrial grade, 99.9%; price: 3,000, ex-factory price |
| Heilongjiang China Coal Longhua | Industrial grade, 99.9%; quoted price: 3,050 |
| Hebei Dingzhou Tianlu New Energy | Industrial grade, 99.9%; quoted price: 2,980 |
| Hebei Zhengyuan Chemical | Industrial grade, 99.9%; quoted price: 2,780, payable by acceptance |
| Shanxi Yangmei Fengxi | Industrial grade, 99.9%; delivery is satisfactory |
| Shandong Lianmeng | Industrial grade, 99.9%; quoted price: 2,840, cash payment |
| Inner Mongolia Shenhua Mengxiya | Industrial grade, 99.9%; external quoted price: 2,260 |
| Henan Xinlianxin | Industrial grade, 99.9%; quoted price: 2,850 |
| Heilongjiang Baotailong Coal | Industrial grade, 99.9%; quoted price: 3,100 |
| Heilongjiang Qitaihe Jiwei | Industrial grade, 99.9%; quoted price: 2,800 |
| Heilongjiang Yidaxin | Industrial grade, 99.9%; quoted price: 2,600 |
| Shanxi Coking | Industrial grade, 99.9%; quoted price: 2,550 |
| Shanxi Jiantao Wansinda | Industrial grade, 99.9%; quoted price: 2,650 |
| Heilongjiang Jianlong Steel | Industrial grade, 99.9%; ex-factory price: 2,750 |
| Sichuan Dazhou Steel | Industrial grade, 99.9%; price: 0; not for export at present |
| Chongqing Wansheng | Methanol; price: -2,900; not available for export yet |
| Hubei Sanning | Industrial grade, 99.9%; price: 2,900; some products are for internal use |
| Shandong Binzhou Xintianyang | Methanol; price: -2,900 |
| Sichuan Chuanwei | Industrial grade, 99.9%; quoted price: 2,950 |
| Dalian Dahuahua | Methanol; grade: -99.9%; price: 3,000; sold only locally |
| Shandong Yankuang Group | Industrial grade, 99.9%; normal delivery |
| Jiangsu Hengsheng | Industrial grade, 99.9%; quoted price: 2,910 |
| Jiangsu Yizhou Coal Coking | Industrial grade, 99.9%; quoted price: 2,900 |
| Shaanxi Weihe Chemical | Methanol; price: -2,750; local pricing |
| Shandong Linyi Hengchang | Industrial grade, 99.9%; normal delivery |
| Shanxi Anze Yongxin | Industrial grade, 99.9%; quoted price: 2,630 |
| Henan Hebi Coal Power | Industrial grade, 99.9%; quoted price: 2,300 |
| Anhui Haoyuan | Industrial grade, 99.9%; ex-factory price, payable by acceptance |
| Guizhou Jinchili Chemical | Industrial grade, 99.9%; quoted price: 3,100 |
| Shandong Xinneng Phoenix | Industrial grade, 99.9%; stable delivery |
| Shandong Tengzhou Shenglong | Industrial grade, 99.9%; ex-factory price: 2,840 |
| Hebei Shijiazhuang Jinshi | Industrial grade, 99.9%; quoted price: 2,790 |
| Shanxi Jiantao Lubao | Industrial grade, 99.9%; quoted price: 2,700 |
| Hunan Yihua | Industrial grade, 99.9%; price: 0; stable supply |
| Cangzhou China Railway Coking | Industrial grade, 99.9%; ex-factory price: 2,880 |
| Shanxi Jinfeng | Industrial grade, 88%; price: 2,700; ex-factory price, payable by acceptance |
| Anhui Linquan | Industrial grade, 99.9%; quoted price: 2,980, payable by acceptance |
| Shaanxi Heimao Coking | Industrial grade, 99.9%; quoted price: 2,600 |
In recent years, the chemical industry as a whole has been in a downturn, characterized by low operating rates and low profit margins. Methanol is a major chemical raw material; if the overall situation in the chemical industry does not improve, it will be difficult for the methanol market to see sustained improvement as well!
Changzhou Fude and Jiangsu Shenghong have started operations one after another. There will be high demand for methanol next year.
Yantai Wanhua’s 600,000-ton MTO facility is also set to enter the methanol market in 2017.
The message sent by the Central Economic Conference is to boost the real economy, which should be positive this year.