The impact of rising crude oil prices in recent times (since November 2009) on the market for methanol and its downstream products【Updated on the 19th! 】
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This post was last edited by jsdggfghhg on 2009-11-19 at 12:35. 1. Methanol is expected to see fluctuating prices with a slight upward trend over the next two weeks. 2. With the decline in demand for liquefied natural gas, energy-related stocks are performing well; crude oil prices are rising, while dimethyl ether prices remain stable with a slight increase. 3. Acetic acid prices are likely to fluctuate in the short term. Unless relevant authorities introduce highly protectionist anti-dumping measures purely to boost growth, competition will limit the potential for increases in China’s methanol and dimethyl ether prices. Any upward movement will be difficult, and prices will continue to fluctuate up and down, similar to what happened after the previous price rise – that is, steady upward fluctuations accompanied by drops. Moreover, the speed of these fluctuations will be lower than that of crude oil prices. However, the current price has already been accepted by the market; therefore, over the next two weeks, methanol prices will remain stable at this level, or even see a slight increase. Currently, the rising price of crude oil has led to an increased demand for dimethyl ether, while the greater use of adhesives in the construction industry has resulted in an increase in demand for formaldehyde. Moreover, the rise in natural gas futures prices has led to an increase in overseas natural gas prices. Therefore, over the next two weeks, methanol prices will remain largely stable at this level, with only a slight increase. Due to rising international oil and gas prices, acetic acid prices have seen significant upward pressure from overseas markets. Although demand remains strong and market inventories are high, prices are only likely to rise slightly amid speculative trends; however, there is considerable resistance from end-user demand. Should there be any fluctuations in the prices of these raw materials, namely oil and gas, prices will drop rapidly back to their original levels, resulting in overall price fluctuations around the current level. When international oil prices rise, the price of acetic acid remains relatively stable, which means that acetic acid will also stay stable over the next two to three weeks and not be greatly affected by fluctuations in crude oil prices. http://i3.6.cn/cvbnm/5f/b5/74/d47e8637daa37f6d9a008066a7b447b9.jpg
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Overall, China’s methanol production capacity is severely overcapacity. Yet regions, especially those that are major coal producers, have no other alternatives and continue to plan methanol projects based on coal; these projects are of small scale, incur high costs, and offer no advantages. Internationally, particularly in the Middle East, methanol projects are of larger scale, with costs as low as $100. Given that China is unlikely to adopt trade protection measures, a decline in methanol prices is inevitable
The possibility of a decline in methanol prices is low. In China, there is a trend toward replacing smaller production facilities with larger ones, which puts downward pressure on prices; small-scale producers cannot survive unless they rely on by-product coke oven gas for methanol production. Otherwise, they will suffer losses and eventually be phased out. As demand for methanol in China increases and larger-scale production helps reduce costs, rising oil prices gradually reduce the competitive advantage of imported methanol. If domestic methanol can regain market share, prices are likely to rise steadily
I think the current price is mainly related to the cost of raw materials. Globally, methanol is mainly produced using natural gas as a raw material, while in China it is primarily produced from coal. Rising crude oil prices will drive up natural gas prices, as well as methanol prices. Additionally, the production cost of methanol in the Middle East at $100 is likely the price from a few years ago. With natural gas consumption per ton of methanol exceeding 850 Nm3, the cost should also be above $100.
There are expectations of a price increase for refined oil products in December: After the most recent adjustment to domestic refined oil prices, there was a gap of 7 dollars between those prices and the actual cost of crude oil. There is still a potential increase of 500 yuan per ton in the price of refined oil, which has not been implemented in accordance with the pricing mechanism for refined oil. There is a high likelihood of price adjustments for natural gas in the near future: the gap between the high prices of imported natural gas and the low prices of domestically produced natural gas will lead to expectations of price increases for domestic natural gas. The Second West-East Gas Pipeline is set to come online in December this year, which will push natural gas price reform onto the agenda.