Introduction: This week, the US-Iran war shows no signs of easing, while the military standoff between Saudi Arabia and Yemen escalates, keeping the Middle East in turmoil. US crude oil has strongly rebounded above $90/barrel, driving up overall energy and chemical prices. Under the dual blockade of the Strait, methanol remains one of the most affected products. Since July 12-15, no methanol vessels have been observed departing again. Some cargoes that were previously loaded are still waiting at anchorage, monitoring the situation before deciding whether to break through.
As of now, the major Middle East regions have shipped a total of 871,200 tons of cargo in June-July. Due to slight discrepancies in market statistics, we are publishing the two-month aggregate data. According to the latest statistics, China's methanol import arrivals from foreign vessels are estimated at 1.0329 million tons for July and over 700,000 tons for August. However, under the influence of typhoon weather and a few other factors, actual unloading may fall short of expectations. We will adjust the monthly data accordingly based on final unloading results.
Due to power supply shortages, lack of transportation capacity, and limited tank capacity at some plants, Iran's operating rate may have dropped to around 10%, with daily output estimated at about 5,000 tons. There is some variation in local enterprise product inventories—companies that shipped more earlier have low inventories, while those with almost no shipments have high inventories. With inventories still available, the core of Middle East shipments in August continues to depend on the Strait blockade, transportation issues, and subsequent changes in operating rates.
On the export front, apart from emotional buying interest in India, other overseas demand appears generally subdued. We have not seen aggressive buying intentions like those during the US-Iran war at the end of February/March. It is understood that, aside from India, demand from Southeast Asia shows low interest in bidding for Chinese FOB cargoes, making deals relatively difficult. Additionally, with limited bonded tank capacity in coastal areas, we maintain our previous view that although new export orders will support a slight rebound in export volumes, it is still difficult to return to previous peaks.
In the domestic market, many plants in production areas are undergoing maintenance, and the restart of some major units has fallen short of expectations, leading to limited lifting by factories. Meanwhile, traders, after frequent short-selling due to poor demand, are covering their positions, which together has driven strong auction performance this week. Downstream MTBE plants are focusing on delivering export orders this month, limiting spot sales. Coupled with the continued rise in isobutane and demand support, the market continues to strengthen. The significant recovery in profits simultaneously supports methanol receiving prices at Lubei refineries.
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