Market confidence to restore methanol market bullish

In 2015, methanol changed its trend, accelerated after the Spring Festival, and the market was hot. However, people in the industry recommend paying close attention to the start-up and production of downstream companies, and should not be blindly optimistic about the demand.

Increased production capacity

According to monitoring data, the effective methanol production capacity in China in 2014 was 68.61 million tons, and the capacity growth was generally higher than the previous two years. In 2015, the growth rate of China's methanol production capacity accelerated, mainly due to the rapid development of coal to methanol to olefins projects. At present, 13 coal-to-olefins projects have been put into production in China; 8 were added in 2014. The above olefins project is supported by 13.42 million tons of methanol, of which the new olefin maternal methanol project in 2014 will have an annual output of 6.9 million tons, and all are concentrated in Shaanxi and Ningxia. From the perspective of the whole year, the methanol production capacity of olefins accounts for 19.8% of the total methanol production capacity in the country, which is an increase of 10%.

Analysts said in an interview with reporters that with the rapid development of the coal-to-olefins industry, China's methanol industry is also in the adjustment phase. At present, China's methanol production enterprises are mainly located in the western regions with resource advantages, and the proportion of methanol production capacity in Inner Mongolia, Shandong, and Shaanxi is relatively large. According to incomplete statistics of Treasure Island, in 2014, about 9.6 million tons of new/expanded methanol plants have been put into operation in the northwestern region (6.9 million tons of olefins-containing methanol plant), and there are still new projects in the area during the later period. From the perspective of future development, China's methanol production capacity and production have a tendency to develop in resource areas, with medium- and large-scale devices being the majority.

Analysts said that in recent years, China's methanol industry is in the initial stage of adjustment and elimination of backward production capacity, and the degree of industry concentration is gradually increasing. Since 2012, the proportion of enterprises with an annual methanol output of 500,000 tons or more has continued to increase. According to data from 2014, China's methanol production enterprises with a scale of more than 500,000 tons accounted for 22% of the total number of enterprises in the country, an increase of 5 percentage points over the previous year; enterprises with over 500,000 tons involved annual production capacity of 39.9 million tons. It accounts for 58.2% of the country's total production capacity.

After the market is hot

Industry data shows that after entering 2015, methanol has changed its previous decline. After the Spring Festival, prices have accelerated and the overall increase has reached 18.77%. Industry analysts said that the upward movement of methanol prices is related to the rebound in crude oil prices, mainly due to the fact that methanol downstream olefins, dimethyl ether, and MTBE are mostly related to crude oil, and the profit of methanol downstream products has increased, which has led to an increase in methanol prices.

As of the week of March 6, the spot price of methanol actively rose. According to analysis by industry insiders, there is also a close link between the hot rise of methanol and the increase in natural gas inventory gas prices. The National Development and Reform Commission announced on February 28 that China's natural gas prices have officially merged since April 1. The price of the highest door station for incremental gas in each province decreased by RMB 0.44 per cubic meter, and the price of the highest stock price for stock gas increased by RMB 0.04 per cubic meter. Due to the fact that China's natural gas methanol production enterprises use inventory gas, domestic gas head methanol costs will continue to increase, pushing up methanol prices.

However, there are also industry analysts said that the current downstream consumption may not be so optimistic as expected, with the rise in the price of methanol, stocking companies before the Spring Festival will reduce procurement, and this will in turn inhibit the price of methanol up. With regard to the late trend of methanol prices, the industry suggests that close attention should be paid to the start-up and production profits of downstream companies.