[Introduction]: This week, the U.S. and Iran engaged in renewed clashes, while the U.S. announced the suspension of a memorandum of understanding and the cancellation of sanction waivers. At the opening of Wednesday morning trading, capital immediately flowed in, methanol futures surged, and the market price briefly returned to above the 2,500 yuan mark. Meanwhile, the market has reopened assessments of import volumes for future months, as well as the potential impact of purchasing and stockpiling by olefin plants (amid their shutdowns) on coastal inventory levels.
Previously, our network had noted the shortage of vessel supply and high freight costs among suppliers in the Persian Gulf region as a whole. The main manifestation of this could be a temporary concentrated release of floating storage, followed by a decline in subsequent shipments. At present, problems with electricity and public utilities have limited Iran's overall production capacity. Meanwhile, non-Iranian sources are also facing sales difficulties due to generally weak external demand and buyer resistance to high prices. However, the renewed U.S.-Iran clashes have led to a sharp price surge in India this week. Market participants have once again turned their attention to supply concerns, with buying interest and some transactions rebounding significantly to $420-430/ton.
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According to the latest statistics, our network ultimately assigned a total shipment volume of 573,200 tons from the main Middle Eastern region in June. Because some vessels were loaded but dispatched in July, this volume has been included in the July total. Non-Iranian Middle Eastern and South American supply supported a significant rebound in non-Iranian volumes in July. Therefore, the total import volume for July is estimated to be around 1.08 million tons. As olefin plants are idled or have planned shutdowns, cargo arrivals at social warehouses quickly supplement supply, leading to a very steep rate of inventory accumulation. However, typhoon weather has typically impacted unloading speeds. Additionally, the renewed change in U.S.-Iran relations and the cancellation of waivers have also altered the declaration of ports for some cargoes, thereby supporting the rebound in Taicang basis over the past two days.
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In August, the market will face historically rare coastal olefin plant shutdowns. However, the olefin feedstock inventory levels are also at historically low levels. Currently, our network tentatively estimates that methanol import supply in August will fall to between 750,000 and 800,000 tons. Some regions may have subjective assessments. Whether olefin plants engage in stockpiling will be key to influencing the trend of methanol port inventories in August. Chempricehub believes that the view that negative factors for methanol have been largely priced in persists, but the overall driving force on the spot side continues to be suppressed by demand. The situation in the Middle East may continue to support stronger methanol prices in the short term. It is advisable to monitor the sustainability of positive momentum in the broader chemical product chain and its impact on methanol prices.
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