【Introduction】: Following the holiday, domestic methanol production and supply increased, while import volumes remained at low levels. Demand was weak, and inventories were low, highlighting an increasingly tight overall supply situation in the domestic methanol market. Coupled with sustained macroeconomic impacts, this drove domestic methanol prices to continue their strong upward trend.
1. Supply Side
Domestic Supply:
During the National Day holiday, most previously shut-down domestic methanol units resumed operations. Consequently, domestic methanol output rebounded rapidly after the holiday compared to pre-holiday levels and is currently at a high point.
Outlook:
Affected by expected maintenance shutdowns at several units, including Inner Mongolia Jiutai, domestic methanol production is projected to decline again in the next period. It will subsequently rise as units restart, but specific total production changes depend on the actual implementation of these maintenance plans.
Import Supply:
During the National Day holiday, vessel discharge volumes were significantly lower than pre-holiday expectations and reached extremely low levels, keeping import supply persistently low.
Outlook:
Import volumes are expected to remain low. Weekly import figures will depend on the speed of vessel discharges.
2. Demand Side
Following the sharp rise in methanol prices after the holiday, margins for many downstream sectors have deteriorated. There are currently no expectations for restarted operations among shut-down downstream units. Attention should be paid to how downstream unit operations are affected by profitability and raw material inventory levels.
3. Inventories
Producer Inventories:
During the National Day holiday, main restrictions on trucking transport led to inventory accumulation at sampled inland producers. However, due to extremely low base inventories prior to the holiday, producer inventories remain at low levels.
Outlook:
Since producers pre-sold some post-holiday volumes before the break, producer inventories are expected to remain low, assuming logistics operate smoothly.
Port Inventories:
During the holiday, extremely low vessel discharge volumes combined with export-driven withdrawals caused port methanol inventories to drop significantly compared to pre-holiday levels.
Outlook:
With import volumes remaining persistently low, there may be some replenishment from inland sources. However, given the scarcity of inland supply and insufficient transport capacity, significant short-term increases are unlikely. While medium-to-long-term volume changes warrant monitoring, port methanol inventories face the possibility of further declines in the short term.
4. Summary
Driven by macroeconomic conditions during the holiday and supply shortages, the market surged after the break. Looking ahead, the tight supply situation persists with no immediate expectation of relief; therefore, the domestic methanol market is likely to maintain its strong performance.
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