In 2012, methanol prices look downstream

Sinochem New Network News The domestic methanol market in 2011 was an out-of-order routine, and there was a lot of chaos. At the beginning of the year, the domestic methanol price trend has been maintained during the mid-year period of the box-type campaign, and the price fluctuation space is very limited. Afterwards, the market was affected by the prospective gold, silver, and silver prices, the higher US electricity price, higher electricity prices, and energy-saving emission reduction policies. The methanol market began to fluctuate significantly in July.

It is worth mentioning that, despite the pattern of volatile and slowly falling methanol prices in September-October, domestic supply levels continued to be adequate. Unlike previous years, the traditional phenomenon of domestic methanol in the winter market has not shown signs of improvement. This is an anti-conventional decline. The shrinkage of supply of raw coal and natural gas and the external factors of rain and snow have failed to boost the methanol market. What are the influencing factors?

In 2011, the supply and demand pattern of methanol chaos continued to be out of balance. In 2011, the domestic methanol production reached a little over 20 million tons, the import volume was roughly around 5.5 million tons, and the export volume was only about 45,000 tons. Based on comprehensive estimates, the apparent domestic consumption of methanol is around 25 million tons, which is a significant increase over 2010. In spite of this, the downstream production of dimethyl ether, methanol, and glacial acetic acid has been far less than the expansion of methanol production capacity. During the year, the new and downstream methanol-to-olefins plant was put into the installation of four major manufacturers, which had a certain impact on the supply of methanol in the northwestern region, and its coverage was not extensive.

In addition, the overall start-up load of domestic methanol companies in 2011 was around 58%, a 7% increase over 2010. In 2007, it was predicted that methanol would fall below RMB 1,000/ton, but it did not slip down to this price. The reason is that the domestic product oil often has a phenomenon of inverted prices, resulting in a large amount of methanol used to blend product oil to reduce costs - nearly 10 million tons of methanol do not know whereabouts each year, considered semi-public open secret. Second, the traditional downstream formaldehyde can also play a significant support role for the raw material methanol. In 2011, the promotion of methanol gasoline significantly accelerated, but it was still limited by the approval of national policies and market abuse.

Cost factors support the weak market In 2011, coal prices continued to remain high, and the electricity price was raised twice in the year, which played a major role in driving production costs of methanol companies. At present, the total production cost of methanol enterprises in the Mainland is between RMB 2,300 and RMB 2,500/ton, and raw coal needs to be extracted from outside. According to the market price of methanol in 2011, the vast majority of manufacturers can guarantee profits. Its profit period is as long as 7-8 months. The production cost of natural gas as raw material is around 2,000 yuan/ton, and the coke oven gas is slightly lower. Since February 2011, the phenomenon of the US gold plate hanging upside down in the domestic market has been particularly serious and long-lasting. It is normal for the price to fall from 200 yuan to 300 yuan/ton. Most businesses hope that the supply of raw materials will shrink after the arrival of the winter season and stimulate the market to rise. However, the subdued demand of downstream demand is simply unable to raise the huge methanol market.

In 2012, there was still an oversupply of overcapacity in the emerging and emerging China's methanol production capacity. The average utilization rate of methanol production in China was around 51% in 2006-2010. Since the fourth quarter of 2008, due to the impact of imported methanol, China's methanol capacity utilization rate has dropped significantly. In the first quarter of 2009, the capacity utilization rate was only about 30%, and the utilization rate fell to the lowest point in recent years. On June 24, 2009, the methanol capacity utilization rate picked up after the anti-dumping of methanol. In 2010, methanol utilization rate reached 51%. In 2011, capacity utilization increased slightly to 58.1%. In 2012, Longzhong statistics, the methanol-to-olefins project will have a major breakthrough in production. In 2012, the new domestic methanol production capacity will be around 5 million tons, including two 1.8 million tons/year methanol-to-olefins projects of the Sinopec Sichuan Vinylon Plant and the Chinese Academy of Sciences and the Jiaxing City Government, and Xinjiang Guanghui 1.2 million tons/year. Methanol plant and Guanghui Phase II 1.2 million tons methanol plant are currently under construction. However, it is expected that the methanol plant put into operation will be accompanied by more downstream olefins projects and will be mainly equipped with supporting facilities. In addition, the increase of traditional methanol downstream equipment is no longer able to support the current existing methanol production capacity, the existing start-up load has enough room for growth. In 2012, the overall average load of domestic methanol enterprises will still not be flushed up to 6.5 percent or more. It oscillated around 60%.

Zhongxing Petrochemical's 600,000-ton/year methanol-to-olefins project is the coal chemical industry process with a full set of independent intellectual property rights. This clarified to a certain extent that the entire engineering technology from the reaction regeneration system to the compression separation can be implemented. The technical feasibility parameters of this project will side-determine the approval of Sinopec's future coal chemical projects. The Development and Reform Commission once tightened approval construction standards for coal chemical projects at the beginning of 2011. Before the new approval list was issued, it was forbidden to build the following projects: annual production of 500,000 tons or less of coal through methanol to olefins projects with an annual output of 1 million tons And the following coal-to-methanol projects, with an annual output of 1 million tons of coal-based dimethyl ether projects, and an annual output of 1 million tons of coal-based oil projects.

It has been estimated that the 0.6 million tons/year coal-to-olefins project will require 18 billion to 19 billion yuan in investment, 3.15 million tons of coal resources, 27 million cubic meters of water consumption, and 3.3 million tons of carbon dioxide emissions. Methanol to olefins are slightly profitable. Petrochemicals will lose slightly. Therefore, whether the methanol olefin project can increase significantly in proportion in 2012, in order to consume a relatively large amount of methanol production, many obstacles and the search for market balance, we still need to wait and see.

In addition, another emerging downstream methanol-made gasoline is also gaining some attention in the market due to slow development.

The traditional downstream share increased in 2011, the traditional domestic downstream, it is relatively good to count a few dimethyl ether. The current data show that in the first 11 months of 2011, the national average price of liquefied gas was 5960 yuan/ton, while the average price of dimethyl ether was 4365 yuan/ton, and the difference was about 1595 yuan/ton. In recent years, with the overall upward trend in international crude oil prices, the price of liquefied petroleum gas (LPG) as a downstream product has also been pushed up, resulting in a continuous increase in the living cost of the residents, which has led to a market outlook for dimethyl ether with relatively low prices.

Low-cost, clean gas products have more than dimethyl ether, and there is currently widespread acceptance of natural gas. The other advantage of dimethyl ether makes it more competitive in the market. In recent years, with the continuous implementation of the West-East Gas Transmission Project, natural gas has been increasingly accepted and recognized by the public. However, it is not difficult for those who are attentive to find that the transportation of natural gas has become a stumbling block to its development. At present, the transportation mode of natural gas in China is basically dependent on pipeline transmission. To be popularized widely requires a lot of construction and follow-up maintenance. However, the proportion of rural areas in China is still relatively large, and it is difficult to complete construction. It can only be limited to the current large and medium-sized cities. The civilian use of the township is still dominated by canned gas, so the route “encircling the cities in the countryside” still applies to the development policy of DME in the domestic gas market.

In summary, liquefied petroleum gas is cheaper than liquefied petroleum gas, and it is more extensive than the natural gas transportation surface, making dimethyl ether has great potential in the development of the domestic gas market. The author believes that by 2015, dimethyl ether will occupy 35% to 40% of China's gas market share. It can be seen that, in the traditional downstream aspect, the late development pace of DME can still form a strong support for the methanol industry.

Domestic self-sufficiency rate increased synchronously In 2010, the domestic methanol self-sufficiency rate rose to 74%, and domestic production capacity and production will continue to show a trend of higher in 2012. Although methanol imports have been stable since 2008, despite the fact that the methanol inversion in 2011 began in February. Judging from the current situation of methanol and the direction of its later development, the consolidation pattern of imports has not shown signs of abating. However, from the perspective of domestic methanol production capacity, import dependency, and domestic demand in the past two years, the increase in China's methanol imports will increase the domestic self-sufficiency rate. I predict that in 2012 China's methanol self-sufficiency rate will rise to about 76%.

Rising Costs Supporting Price Increases From the aspect of raw material gas, in March 2010, as the world's largest LNG importer - Japan's nuclear accidents surged after the nuclear accident, which triggered a global upsurge in buying, stimulating prices all the way to the year. The highest point also makes the market prospects of the LNG ship that continues to be sluggish. During the “Twelfth Five-Year Plan” period, China’s natural gas consumption will continue to maintain a rapid growth trend, and it is expected that by 2015 domestic apparent consumption will reach 260 to 300 billion cubic meters. Therefore, China’s coal-based natural gas and shale gas will have Better development and utilization. By then, it is conservatively estimated that China's natural gas production will reach about 150 billion cubic meters, but in order to meet the continued expansion of demand, imports will also show a larger growth rate. During the “Twelfth Five-Year Plan” period, China is expected to further promote the reform of natural gas prices and gradually be in line with the world. Looking at the current factory average price, there is still room for upward adjustment in 2012. This will obviously support the domestic methanol cost in the later period.

Another major raw material coal for coal, I have to say is that in 2012, I am optimistic about anthracite coal. From the perspective of resources, anthracite accounts for only 12% of the nation's coal resources, of which high-quality anthracite coal accounts for only 1/6 of the anthracite reserves, and is very scarce. Since 2011, on the one hand, affected by the increase of international fertilizer prices, the profitability of the downstream urea industry of anthracite has improved. On the other hand, the growth of domestic supply of high-quality anthracite coal is very slow. It is expected that the supply and demand gap of high-quality anthracite coal for chemical industry will still exist in 2012, and the coal price is still expected. rise. The fourth quarter and the first quarter are also the urea reserve season, and the anthracite coal is not affected by the development and reform commission's thermal coal price limit, which is worth long-term prospects.

In view of the promising future situation of the two major raw materials, the author believes that the cost of domestic methanol will still be a strong backing that cannot be ignored in the later period. The overall average price may rise again by one step over 2011.

The current production cost of international methanol is 150 US$/ton for large-scale devices, while the domestic unit cost for producing 200 million tons/year of coal-based monoalcohol is around 365 US$/ton. The production cost of methanol in China has obviously exceeded the international cost. The author believes that domestic electricity prices and water prices, crude oil-induced transportation prices rise, or in the next 3 to 5 years will make the domestic cost of methanol is still upward trend in the shock.

Taken together, the price of China's methanol will be one of the benchmarks for methanol in Asia for a period of up to three or four years, and the trend of the overall long-term trend will show an upward trend. The suppression of the environment may lead to the stalemate and the neutral stage of the methanol production in the later period, and the production facilities gradually shift to large-scale installations.