Introduction: From a fundamental perspective of methanol, recent high import volumes in China, combined with recovered domestic supply and weak downstream buying (mainly for essential procurement), point to subdued demand, which exerts pressure on the near-term market. In the medium to long term, due to geopolitical factors, import volumes are expected to shrink again. Meanwhile, as the "Golden September and Silver October" season approaches, market sentiment may improve to some extent, providing support for the market floor.
I. Supply Side: Likely to Increase First, Then Decrease
Earlier, multiple methanol plants in the major Middle Eastern methanol markets were restarted, coupled with the recovery of international logistics, leading to a rapid phase increase in import volumes. Recently, China's methanol imports are expected to remain at a high level, alleviating the supply tightness in the domestic market, especially in coastal methanol markets.
Due to repeated geopolitical tensions, some public facilities in the major Middle Eastern methanol markets have been reallocated for civilian use. Multiple methanol plants have again been shut down due to various factors, tightening the overall international methanol supply outlook. Consequently, the expected import supply for China's coastal methanol markets is also declining. However, the actual realization of this outlook still needs to factor in international plant operations, shipping, and other influences.
From the supply side, the supply outlook is expected to show an initial increase followed by a decrease, but it still carries some uncertainty.
II. Demand Side: Expected to Transition from Weak to Strong
Currently, multiple olefin plants in coastal areas are in a shutdown state, and no restart news has been heard recently, resulting in weak downstream demand. Additionally, due to the geopolitical situation, the methanol market is volatile. Coupled with the fact that the short-term increase in import supply has already materialized, traders and downstream players are operating cautiously, leading to lackluster buying interest in some markets. However, entering August, under the influence of supply-side uncertainty, speculation around the "Golden September and Silver October" season may begin. The downstream demand off-season is likely to gradually improve, with the potential for a positive turnaround.
From the demand side, methanol demand is expected to shift from weak to strong. However, the actual impact on downstream plant operating rates will depend on factors such as downstream profit margins and feedstock inventories.
III. Supply-Demand Structure: Likely to Reverse Again
Based on expectations for the supply and demand dynamics, in the near term, the domestic methanol market exhibits strong supply and weak demand. In the medium to long term, the market may see falling supply and rising demand. The supply-demand structure could reverse rapidly again, with the supply-demand gap potentially turning quickly from positive to negative. This phase of inventory accumulation may be short-lived. Specific outcomes still depend on factors such as international plant operating rates and domestic downstream plant operating rates.
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