When the city gate catches fire, the fish in the pond suffer as well

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This post was last edited by yinkuilin6868 on 2015-11-19 09:04. The topic of low international crude oil prices continues to dominate the market; recently, crude oil futures in Europe and the United States have been hovering around $40–$41 per ton, reaching their lowest levels in almost two and a half months. Compared to their peak levels in June 2014 of $115.06 and $107.26 per barrel, the prices of crude oil futures in Europe and the United States have dropped by 62.09% and 62.02%, respectively. But then again, crude oil is not a direct upstream source for methanol products; so what impact does a drop in crude oil prices have on the methanol market? In terms of mindset: As the leader among commodities, crude oil’s every move is bound to have a certain impact on the market. With the recent sharp drop in crude oil prices, panic has spread across the market. As a chemical product, methanol is naturally unable to remain unaffected by this situation; therefore, the decline in crude oil prices has an adverse psychological impact on the methanol market. This is undoubtedly a form of \"psychological warfare\". On the other hand, a decline in crude oil prices will drive down natural gas prices; for methanol production using natural gas, the reduced production costs will also affect the price of methanol. On the demand side, among methanol’s downstream products, dimethyl ether, MTBE, and methanol-to-olefins are closely tied to the trends in crude oil prices. 94% dimethyl ether is used in the market for blending with liquefied gas, and the price of liquefied gas is also influenced by the price of crude oil. When crude oil prices fall, liquefied gas cannot increase in price on its own; likewise, when liquefied gas prices drop, dimethyl ether also faces significant pressure. According to tests, the overall operating rate of dimethyl ether in China is currently around 30%, while the capacity utilization rate is only about 10%. Dimethyl ether accounts for roughly 16% of demand in the downstream sector of the methanol market; its low operating rate thus reduces the demand for methanol. Regarding MTBE, international oil prices have been showing a downward trend recently, leading to ten consecutive drops in the refined oil market; the overall performance of the oil market is weak, and there is little momentum supporting an increase in MTBE prices. However, due to the high price of C4 as a raw material for MTBE, the market has limited room for decline supported by costs. Methanol-to-olefins accounts for 30% of the downstream applications of methanol, and olefins are part of the downstream products of traditional petrochemical industry; their prices are closely linked to crude oil prices. Although methanol-to-olefins plants have rapidly taken over the downstream market for methanol in recent years, amid low crude oil prices, their operating capacity has not been fully utilized, resulting in very low actual consumption. As crude oil prices continue to fall, the profits of methanol-based downstream products are reduced, leading to a decrease in manufacturers’ enthusiasm for purchasing methanol. Taking the production of olefins from methanol as an example, in 2015, the use of methanol for this purpose accounted for around 40% of total methanol consumption in downstream applications; it has thus become the largest such application in China, and fluctuations in demand in this area have a significant impact on the methanol market. In particular, with the recent continuous decline in the international and domestic propylene markets, most methanol-to-propylene plants along the coast are operating at a loss, and their production rates have been affected to varying degrees. Currently, there are many negative factors in the oil market. Under the pressure of oversupply and expectations of interest rate hikes by the Federal Reserve, the trend of oil prices remains unfavorable. With low oil prices, it is difficult for downstream industries using methanol to generate profits, which in turn drives down the prices of these downstream products and reduces demand for methanol. It is unlikely that downstream demand will improve in the short term; these negative factors continue to affect the market, and for the methanol market to rise in the future, stronger positive factors will be needed.