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Methanol: The \"bottom\" has been reached! ? (II) Author/Source: Date: 2018-03-09 Clicks: 135 Building on the analysis from the previous issue, in this one we will focus on examining what impacts various future factors are likely to have on the market http://img.yf116.cn/image/img/20180309/1524565549612.jpg http://img.yf116.cn/image/img/20180309/1526505561029.jpg http://img.yf116.cn/image/img/20180309/1527175563785.jpg According to Zhongyu, looking at international markets, there are plans for maintenance work on production facilities overseas in April, involving a capacity reduction of no less than 4.3 million tons. The possibility of these two new production units in Iran and the United States starting operations is low; as a result, international supply is expected to decrease by around 80,000–100,000 tons in April. This reduction is likely to be offset partly by imports in March, with only a slight increase in domestic supply. From the mainland perspective, the facilities subject to planned maintenance are mainly located in the period from late March to April, with a total production capacity of around 4.6 million tons (primarily in the northwest region); most of these maintenance periods last about 1 month. The capacity that will be brought back online as a result of these plans amounts to only around 1.3 million tons. New production capacities, on the other hand, are concentrated in the period from May to July, totaling around 2.4 million tons. Overall, supply is tight in the mainland during March and April, while it is more ample from May to July. From the demand side, although there are expectations of an increase in demand from traditional downstream sectors such as formaldehyde and dimethyl ether, the extent to which production capacity will increase may be limited due to factors such as the environmental inspections on March 15, logistics issues, and rising costs. Additionally, some new downstream facilities are scheduled for maintenance in April, so there are expectations of a decline in demand. In summary, overall, in April the expectation of a decline in supply in China was stronger than that of demand, with a slight improvement from May to July. http://img.yf116.cn/image/img/20180309/1530505585023.jpg Overall, Zhongyu believes that a temporary bottom has likely been reached in China’s methanol market. A rebound may begin in mid-March, with prices reaching a temporary peak by mid-April; the increase in prices during this period could be in the range of 100–180 yuan per ton (as of March 8, prices were between 1960–2020 yuan per ton in Shaanxi and Inner Mongolia, and 2700–2710 yuan per ton in Taicang). After that, as production facilities are restarted one after another and new facilities come online, coupled with the weak demand in the downstream sector, the market is likely to enter another downward trend, with prices possibly falling to their lowest level of the year by mid-to-late June.