Eastern methanol-to-olefin companies may face losses

Currently, methanol-to-olefin enterprises (MTO) in coastal areas are facing losses across the board.
Among them, enterprises that produce ethylene and propylene polymers lose more
.
Production restriction + low inventory methanol ushered in a "warm winter" This year, not only methanol production companies in Hebei, Shanxi, and Henan, but also coal chemical companies in Shaanxi will also limit production
.
Relevant information shows that this year, coal chemical companies in Shaanxi Province will implement measures such as peak staggering and reducing production load to deal with air pollution and winter smog
.
Therefore, not only the methanol production capacity of nearly 4 million tons in North China was affected, but also Shaanxi Province, the world's famous coal chemical industry concentration area-China's second largest methanol production capacity, with a total methanol production capacity of close to 10 million tons, will also be greatly affected.
Impact
.
On the other hand, behind the shortage of supply caused by production restrictions is the relatively low inventory of middlemen and downstream companies.
Due to the poor expectations of the end of this year, many downstream companies maintain low inventories to cope with their own production restrictions and methanol prices.
The decline
.
However, after limiting production, most downstream companies maintained rigid demand, and the reduction in methanol demand was not as expected, while the external methanol-to-olefin companies in coastal areas have maintained a relatively high load, which has caused the methanol spot price to rise all the way and continue to be strong
.
The rapid decline in downstream profits is different from methanol, which is rising all the way.
Crude oil, another major raw material for olefins, has begun a correction after hitting a high in more than two years last week
.
First, China's October crude oil import data hit a 13-month low, and then the U.
S.
data continued to show negative results, which put crude oil prices down under pressure
.
After the decline in crude oil, international ethylene and propylene prices will continue to weaken
.
Winter is a relatively low season for polyolefin demand, and downstream demand for olefin polymers will weaken until after the Spring Festival in the coming year
.
This year is a minor maintenance year for petrochemical plants, and its own supply is higher than the same period in previous years.
Since October, domestic olefin plants for preliminary maintenance have been restarted one after another, exacerbating the situation of olefin supply exceeding demand
.
Unlike polyolefin futures and the spot market, which fell synchronously with the spot price, methanol has continued to rise in the spot market recently and futures have oscillated.

.
From the perspective of futures prices, companies that currently use methanol to produce polyethylene and polypropylene are already unprofitable, and even the processing fees are difficult to recover
.
The spot market is even less optimistic.
At the end of October, the price of methanol in southern Shandong was RMB 2,600/ton, and the price of polypropylene was RMB 8,700/ton.
There was still a certain profit, but by the middle of this month, the price of methanol in southern Shandong was 2950 yuan / ton, polypropylene price is 9,000 yuan / ton, not to mention profit, corporate cash flow can no longer be guaranteed
.
The rise and fall of olefins will seriously affect the start of methanol-to-olefin plants, because methanol-to-olefins consumption of methanol has accounted for about half of the total domestic methanol consumption
.
Once this situation continues for a long time, the methanol-to-olefin plant will be under pressure to shut down, which will seriously affect the amount of methanol
.
At present, the main contradiction in the methanol market is still the contradiction between the stable demand of the offshore methanol-to-olefin enterprises in the coastal areas and the inadequate supply of the inland and import
.
The limited production of 2+26 cities in the north and Shaanxi Province has reduced the supply of methanol to coastal areas to a certain extent
.
In terms of imports, this year has continued to maintain a relatively weak supply, especially in the Middle East and Southeast Asia, where there are more overhauls, and the port area's inventory is not large
.
The recent low rainfall in the south and the low water season of the Yangtze River have undoubtedly affected the supply of methanol from southwestern China to East China
.
At present, the short-term loss of MTO has not yet touched the bottom line of the enterprise.
Before the suspension of MTO production, methanol prices in coastal areas will remain strong
.