【Introduction】: This week, methanol futures rebounded from oversold levels again, with macro factors remaining the primary driver. Early in the week, methanol prices followed crude oil lower due to news of individual vessels departing, compounded by plans for Shandong local refineries to reduce loads and shut down units over the weekend, which confirmed weakening traditional consumption. Consequently, the main January contract touched a low of 3,043 yuan/ton. In the latter half of the week, crude oil rebounded, and buying activity from some MTO (Methanol-to-Olefins) plants fueled expectations of restarts, further supporting a synchronized rebound in methanol prices. In reality, we have never denied that the off-season for traditional demand has arrived; formaldehyde and MTBE markets are notably weak, suppressing receiving prices in major northern sales regions. However, although margins for most other traditional downstream sectors have narrowed, they remain acceptable. Going forward, olefin plant operations will continue to support a favorable outlook for the overall methanol supply-demand balance.
Currently, we maintain our expectation for significant inventory accumulation in coastal regions in November, driven by concentrated MTO shutdowns, domestic arbitrage opportunities, and recovering imports. However, even after this accumulation, inventory levels are expected to remain below historical averages for the same period. Although Baofeng’s new supply may eventually materialize in December, and Southwest production areas might face extended gas restriction periods due to exceptionally high profits, the geopolitical situation between the US and Iran remains unpredictable. Import supplies are unlikely to return to previous highs. With some MTO plants planning restarts in December, coastal inventories may decline again after accumulating in November. Furthermore, future capacity additions depend on MTO units scheduled to come online amidst political uncertainties, and some suppliers have already indicated reductions or suspensions of their external sales contract volumes for December.
As of the latest data statistics, methanol import vessel schedules for November total 519,100 tons. Of this, the Middle East, a key region, accounts for 137,000 tons, while non-Iranian sources account for 382,100 tons. The actual discharge volume at month-end may vary depending on the arrival and berthing speed of certain vessels. Import supply in December is likely to decrease again. Cargo volumes from the Middle East are currently assessed to remain at low levels. Performance across non-Iranian regions varies slightly, but mainstream suppliers indicate that overseas demand remains relatively robust. Additionally, slight delays in loading times for some vessels may affect arrivals. Therefore, non-Iranian arrivals in December are expected to drop month-on-month to between 300,000 and 350,000 tons (excluding Russian land transport).
In summary, Chempricehub forecasts that if the Middle East situation does not improve and far-month contracts remain in deep backwardation, methanol futures may continue to show strength. However, before the official concentrated restart of MTO plants, weak traditional demand may negatively impact spot basis performance. Future gas restrictions and production cuts in the Southwest could affect the inflow of domestic product into Jiangsu. Therefore, whether Baofeng’s new unit comes online as scheduled will be crucial for supplementing domestic supply to coastal regions.
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