[Industry Focus]：Methanol market overall poor performance, short-term need to be cautious procurement

to December 2022, China's methanol price market as a whole performed poorly, with the center of gravity declining to varying degrees, the overall decline in the mainland being greater than that of ports, and the decline in the mainland consumption area being greater than that of the production area. The reason is that, in addition to this month's real estate, epidemic policy adjustments and other macro profits, port unloading is lower than expected, absolute inventory is low, the end of the month small short support for the coastal market still exists. Return to the mainland, the end of the downstream demand continued to weaken, the upstream before the festival in urgent need of drainage, traders short selling and other games are obvious. In addition, although the epidemic policy easing, but the market also ushered in a new round of "infection peak", in addition to further exacerbating the market operation cautious, in the context of weak demand, driver infection caused by the contraction of transport capacity, freight rates again squeezed the upstream profit matching market. Due to weak demand and tight transport capacity, although the mainland-port arbitrage was opened in December, the overall circulation was general.

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December
, China's methanol industry started nearly 71%, an increase of 0.96 percentage points from the previous month. Although this month's gas restrictions and failure suspension led to some supply contraction, but the main production area of the northwest large project overall operation is good, Shandong part of the maintenance project restart, the overall supply is relatively sufficient. As far as domestic supply in January next year is concerned, it is expected that the overall ratio will decrease slightly from the previous month, but the burden will be reduced to a limited extent. Specifically, in addition to the supply loss caused by gas restrictions, some large-scale equipment failures were suspended at the end of December, and some projects in Shandong and Yunnan were suspended due to cost and profit problems or plans. However, considering that in December in pengpeng, Ningxia, two new devices of Shanxi Junjie New Materials have been gradually put into production, and a small amount of goods have already flowed into the market. Domestic methanol supply is expected to decline in January 2023, taking into account the expected burden of subsequent new projects or to compensate for some supply losses. On the import side, although the Iranian part of the supply contracted slightly in December, the inflow of some non-Iranian commodities increased, combined with the impact of the delayed release of some commodities in November. As a result, China's total methanol imports increased in December and are expected to recover to around 103-1.05 million tonnes. As far as January next year is concerned, considering the decrease in Iran's construction and the slight decrease in delivery volume, it is expected that the import volume in January may decrease again. However, considering the restrictions on some delayed goods in December and the winter unloading rate, it is expected that China's methanol import volume in January may be close to 90-950000 tons.

increased slightly in December, and the operating level of other downstream formaldehyde, acetic acid, dimethyl ether and olefins also decreased. Judging from the demand in January next year, considering the impact of the new year and Spring Festival holidays, most of the traditional downstream and its terminal enterprises will gradually stop or reduce their burden and enter the holiday state. Therefore, the overall demand performance of traditional terminals will continue to be weak, focusing on the start of some downstream industries. CTO/MTO in terms of demand, the current port, mainland part of the shutdown projects have not yet resumed, part of the operating project load is not high, the overall industry demand is relatively low; January part of the domestic shutdown projects or driving expectations, if you can resume on time, downstream raw material methanol demand or a slight increase, pay attention to the specific project of the start and stop.

To sum up, January coincides with New Year's Day and the Spring Festival double holiday, so the market characteristics such as upstream warehouses before the holiday, weak demand before and after the holiday, and relatively strong freight rates are relatively obvious. Considering the weak willingness of traders to hold and the relatively cautious inventory intervention of consumers, it is expected that the domestic methanol market may be at a relatively low level in January. In the second half of the year, with the beginning of the Spring Festival holiday, this stage is mainly the digestion of early contracts. However, taking into account the macro policy on the strong drive of commodities, the absolute level of port inventory at this stage is still not high, overseas gas supply contraction, some olefin inventory restart expectations, port performance may be slightly stronger than the mainland, pay close attention to the reservoir unloading speed, 01 contract delivery and other factors.