Methanol hit by rising inventory and weak coal

Since the beginning of May, China domestic yuan methanol price has hit this year's new low. As of May 15, yuan methanol price in Taicang, Jiangsu has declined gradually to 2320yuan/mt.

Earlier in Apr, methanol cargo arrivals to China exceeded expectation to reach about 950kt. As a result, port inventory kept increasing in the first two weeks of May, to above 700kt as of May 12.

Compared to the situation earlier, the inventory is still at a relatively low level, which means that there's large upward space for the inventory to rise. The inventory at Jiangsu, Zhejiang and Fujian hovers low and may increase.

Based on CCFGroup's statistics, mine-mouth coal price at Ordos, Inner Mongolia reached its peak in end-2022, before extending its downward movement in 2023. Methanol is under pressure from softening of coal price coupled with weak fundamentals. The negative margin of methanol based on coal is narrowing gradually, and it is expected that there would be further downward space for coal and methanol prices.