Companies enter a golden period of profitability; methanol profit margins exceed 35%

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Enterprises enter a golden period of profitability; methanol profit margins exceed 35% Author/Source: China Chemical Industry News Date: 2018-10-25 Clicks: 36 Since September, the domestic methanol market has seen continuous price increases. As of October 23, the price in the mainstream market was around 3,223 yuan per ton, representing a 20.74% increase compared to the same period last year. The transaction prices at several major ports exceeded 3,500 yuan, with further increases seeming likely; as a result, methanol manufacturers are experiencing a rare golden period of profitability. Currently, the profit per ton of methanol is around 1,200 yuan, with a profit margin exceeding 35%; in some companies, this figure even reaches 40%. 　 “Recently, downstream companies have been operating well and have increased their purchases of methanol. At the same time, as import volumes have declined, port inventories have been dropping continuously, driving up prices in the market. Additionally, growing potential demand also played a supporting role. However, as trading volume at higher levels declines, the risk of a pullback as the market reaches its peak is also increasing. ”An operational executive from Henan Energy and Chemical Group analyzed. 　 Good operations downstream Reporters from China Chemical Industry News have learned from large coal chemical enterprises in Henan, Inner Mongolia and other regions that despite the rising prices of methanol, companies involved in the production of acetic acid, coal-based olefins, and methanol-based olefins continue to enjoy high profits, providing strong support for the methanol market. 　 Specifically, the acetic acid market continued to rise, with the profit per ton of the product reaching around 2,000 yuan. In the case of olefins, driven by the central bank’s cuts to reserve requirements and rising crude oil prices, commodity futures have strengthened, leading to an increasing atmosphere of speculation in the market. Coupled with tight supply from suppliers, profits for olefin manufacturers have increased significantly; currently, the profit per ton for coal-based olefins exceeds 3,500 yuan. 　 High profits have driven the operating rates of major downstream products of methanol to remain at high levels; for example, the operating rate of coal-to-olefins plants reached 89%, while that of acetic acid plants reached 81%. 　 Ye Zhiguo, a trader from Hebei, said that methanol prices are currently at high levels, increasing the likelihood of consolidation in the coming period. With stable costs, profits of downstream enterprises are likely to continue growing, and the operating rates will also remain high, providing support for the methanol market. A range-bound movement at higher levels may become the dominant trend in the methanol market in the near term. 　 Inventory continues to decline. According to statistics from the Henan Petroleum and Chemicals Network, China’s average monthly methanol imports from January to August amounted to 616,000 tons, with a cumulative total of 4.928 million tons – a 9.8% decrease compared to the previous year. Starting in September, methanol inventories at China’s major ports showed a continuous downward trend, dropping from 880,000 tons to around 680,000 tons by mid-October, a decrease of 22.7%. This has driven up the transaction prices of methanol. At the same time, the international methanol market continues to rise; the current CIF price is around 3,500 yuan, which provides strong support for the domestic market. 　 Shao Huiwen, manager of the marketing department at Henan Kaipu Group Co., Ltd., said that methanol manufacturers are achieving substantial profits, which has increased their enthusiasm to operate. However, following recent environmental inspections, companies have not truly increased their operating rates significantly; the operating rate was 55% in September and 60% at the beginning of October. As downstream demand grows and companies increase their inventory levels, there is a slight imbalance between supply and demand, which leads to rising prices. However, if methanol producers continue to increase production in late October, it is not ruled out that a new supply-demand balance could be established. 　 Potential demand growth: Among the enterprises that use methanol as a raw material, the operation rates of facilities producing acetic acid, MTBE, DMF, etc. remain high, and there is still room for further increase, which provides strong support for demand for methanol. ”Zhang Aiping, director of the Information Department at the Henan Province Petroleum and Chemical Industry Association, analyzed. 　 It is understood that on October 10, the Shanxi Provincial Quality and Technical Supervision Bureau issued two local standards: the \"General Technical Requirements for Methanol Fuel Used in Boilers\" and the \"Technical Specifications for Storage and Supply Facilities for Methanol Fuel Used in Boilers\". The introduction and implementation of these standards can effectively ensure the adoption of methanol fuel as a substitute for natural gas in heating in certain areas, which is likely to lead to a further increase in methanol consumption and is favorable for future market conditions. 　 However, as the domestic methanol spot and futures markets began to decline slightly starting on October 17, a bearish sentiment emerged in the country.