China methanol market analysis and forecasting

China methanol market is recently volatile. Here are some frequently asked questions about recent methanol market.

1. What are the impacts on methanol market?

China methanol market has been fluctuating heavily since Mar, driven up by the spikes in crude oil but then pulling back with crude oil correcting down. Then, with the spread of pandemic in China, methanol market was weighed lower.

It can be easily seen that methanol market is deeply affected by crude oil and fluctuated sharply recently. Firstly, the market was driven by crude oil. With the changing situation of Russia-Ukraine conflict and negotiation, crude oil has turned more volatile, playing a decisive role to petrochemical market. Secondly, downstream demand was hit by the spread of pandemic. Downstream plant operations were restricted with operating rates of formaldehyde and DME plants dropping. As the confirmed cases of covid-19 infections kept increasing, downstream plant production could still be under strains.

2. How will the pandemic affect methanol market?

The direct impact is on logistics for methanol market, and then on downstream demand. Feedstock supplies to methanol plants reduce and it is difficult for some producers to deliver goods, due to fewer cars available caused by the pandemic. In addition, some highways are shut due to the measures to curb the pandemic. Therefore, the duration for logistics gets longer and the efficiency of material turnover for the companies turns lower. As a result, some methanol plants cut operating rates and some in the areas under control even get shut. Picking up of goods from the port reserve areas is also slowed down.

3. When will the spring turnaround season begin?

According to the maintenance schedules, the spring turnaround season is expected to last from Apr to May. There’s not yet any sign of bringing forward the turnaround, while some plants may postpone the maintenance due to the pandemic. If the logistics restrictions sustain, downstream plants may step up the production cuts or even shut. However, as the government attaches great importance to the pandemic controlling, the situation is not pessimistic. The impact on plant operation still needs further observation.

4. How will methanol market move in the future?

China methanol market will still be dependent on crude oil, coal and the pandemic. Though the turnaround season is expected to begin in Apr, both supply and demand may be anemic due to the measures to stem the pandemic. With methanol supply and demand largely balanced, the geopolitical issue and crude oil remain the dominate factor that affects methanol market. There’s also some uncertainties in the pandemic situation. After the price drop earlier, methanol market find a floor from firm coal cost. The price may stabilize with some upward space with the pandemic impact getting relieved.