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Methanol: The \"bottom\" has been reached! ? (1) Author/Source: Date: 2018-03-08 Clicks: 124 http://img.yf116.cn/image/img/20180308/163185946860.jpg First, let’s take a look at when the market started to decline How did it fall? Since late December 2017, China’s methanol market has been on a downward trend. Although there was a slight rebound in early January 2018 due to factors such as temporary stock replenishment by some downstream companies, the increase was limited (as crude oil prices dropped below $60 per barrel at that time). Starting from January 1, 2018, the environmental protection tax came into effect, resulting in increased production costs for most methanol and related enterprises in China. Meanwhile, affected by the environmental regulations, these enterprises showed little enthusiasm for stockpiling goods ahead of the Spring Festival this year. On the other hand, due to prolonged losses, some MTO enterprises reduced their operational capacity to 70% of normal levels. In addition, some downstream facilities such as those for producing hydrogen from methanol and dimethyl carbonate in areas like Northern Shandong were shut down for maintenance, and formaldehyde factories also suspended operations for holidays. As a result, the market weakened ahead of the Spring Festival. After the holiday, although freight costs continued to decline (according to Zhongyu’s monitoring, the cost from Inner Mongolia to northern Shandong dropped by over 100 yuan per ton compared to before the holiday), companies in the northwest regions such as Shaanxi and Inner Mongolia were under pressure to lower their prices due to accumulating inventory and the restart of some production facilities using gas as a feedstock (including those in Inner Mongolia’s Boyuan, with a total capacity of around 2.3 million tons). The recovery of downstream facilities that use formaldehyde also progressed slowly (the resumption of operations was slower compared to the same period in previous years), and regions along the Bohai Sea such as Hebei and Shandong followed suit by reducing their prices as well. With the end of the Spring Festival, imported cargo ships that had been stranded in port earlier began to go through customs and enter the port. As domestic and international prices became aligned and an arbitrage opportunity emerged, more imported goods arrived at the ports, resulting in port inventory levels increasing by around 100,000 tons compared to the end of January. Meanwhile, the MA05 price dropped significantly, putting pressure on the port’s spot market; as a result, the arbitrage opportunity between the mainland and ports closed, and the mainland market continued to decline. The supply-demand imbalance is prominent (supply is increasing significantly while demand is changing little), and the domestic market continues to decline. http://img.yf116.cn/image/img/20180308/1632185953819.jpg According to data from Zhongyu Monitoring, since 2018, the market in China’s northwestern region has experienced the largest decline, at 29%-31%, while the decline in the eastern region was the smallest, at 20%-22%. Currently, the price difference between the eastern and western regions remains above 700 yuan per ton. (To be continued.) . . . . . ）