www.icis.com making sense of methanol prices - a pra view yu guo and fahima khail june 2014 irib...
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Making sense of Methanol prices- a PRA view
Yu Guo and Fahima Khail
June 2014
IRIB International Conference Center, Iran
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Agenda
• Trade flow & market review 2013-Q1 2014• Asia methanol market brief & price drivers• Market outlooks
Asia Methanol
• Market brief• Key price drivers• Market outlooks
India Methanol
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Methanol
US
EU
China
SouthKorea
ME
Net exporters: Iran, Saudi Arabia, Oman, SEA producers, Net importers: China, Taiwan, Korea, Singapore, India, EU and US
*Figures for the year of 2013
Malaysia
Singapore
Taiwan
Import: 4,858ktExport: 772kt
Source: market, KITA, IE Singapore
Import: 120ktRe-Export: 12kt
Import: 1,695ktExport: 423kt
Import: 1,273ktIndia
Net Import: 6,651kt
Indonesia
NZ
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Supply situation in the key end-user market
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Intra-region trade opportunities
• China – SEA arbitrage opportunities often appear
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Factors affecting
Methanol prices
Domestic prices
Futures prices
Inventory level
Local material
availability
Crude & Global Factors
Key prices drivers for spot methanol (CFR China) prices
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Domestic prices v.s. Import prices
• Key Chinese players often use local prices as benchmark• Correlation coefficient = 0.93
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Factors affecting
Methanol prices
Domestic prices
Futures prices
Inventory level
Local material
availability
Crude & Global Factors
Key prices drivers for spot methanol (CFR China) prices
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Futures prices v.s. import prices
• Futures prices sometimes influence China market sentiment• Correlation coefficient = 0.69
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Factors affecting
Methanol prices
Domestic prices
Futures prices
Inventory level
Local material
availability
Crude & Global Factors
Key prices drivers for spot methanol (CFR China) prices
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Inventory level v.s. import prices
• Inventory level in China drives/caps buying activities • Correlation coefficient = 0.61
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Factors affecting
Methanol prices
Domestic prices
Futures prices
Inventory level
Local material
availability
Crude & Global Factors
Key prices drivers for spot methanol (CFR China) prices
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Overall supply in China v.s. import prices
• Actual supply/expected supply often affects sentiment• Correlation coefficient = 0.34
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Supply situation in the key end-user market
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Domestic supply v.s. import prices
• How important is operating rates among local producers?• Correlation coefficient = 0.54
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Import supply v.s. import prices
• Import volumes and its prices• Correlation coefficient = 0.60
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Factors affecting
Methanol prices
Domestic prices
Futures prices
Inventory level
Local material
availability
Crude & Global Factors
Key prices drivers for spot methanol (CFR China) prices
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Crude v.s. import prices
• Crude prices provide a price direction for the broader market• Correlation coefficient = 0.39
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Factors affecting
Methanol prices
Domestic prices
Futures prices
Inventory level
Local material
availability
Crude & Global factors
Key drivers for
day-to-day spot
prices:
Methanol
futures
China domestic
prices
Key drivers for
long-term price
trend
Supply
Demand
0.93
0.690.61
0.54-0.59
0.39
Key factors in monitoring spot methanol (CFR China) prices
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End-users
• formaldehyde, acetic acid, 1-4 butanediol, mono methacrylate (MMA), methylamines, and chloromethanes
• China GDP growth estimated at 7% in 2014 and 6% in 2015
Demand from the traditional sectors is expected to grow in line with GDP
Going forward
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End-users
• MTO, fuel cells, DME, gasoline derived from methanol, as well as the blending of methanol into gasoline
• 9m tonne demand in China, year 2013• Expected growth rate in 2014-2015 at 30-35%
Demand from the non-traditional sectors is expected to gather pace
Going forward
Source: ICIS News
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End-users
Demand structure in China
Source: ICIS China
Traditional
Average Growth Rate
GDP
Non-Traditional2009-2013
57.5%
Traditional
Average Growth Rate
GDP
Non-Traditional2014-2015Est
30-35%
Demand Structure by Products (%)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2005 2007 2009 2010 2015E
MTO/MTP
Methanol gasoline
DME
Other Conventional
MTBE
AA
Formaldehyde
www.icis.comSource: ICIS China
Going forward
Company name MTO/CTO capacity
Methanol capacity
PP/PE capacity Estimated startup
Ningxia Coal Industry Group
500 0 0/500 Q3 2014
Yulin Energy, Shaanxi Yanchang Petroleum
600 1800 300/300 Q3 2014
Baofeng Energy 600 1500 300/300 Q4 2014
Qinghai Yanhu 300 1000 170/160 Q4 2014
Shaanxi Coal and Chemical Industry Group
700 1800 300/400 Q4 2014
Shenda Chem 400 0 200/200 Q4 2014
Hengtong Chemical 300 0 N.A. Q4 2014
Fund Energy 300 0 165/165 Q4 2014
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2013 2015With existing projects
Projects approved/awaiting approval
• Over 2.6m tonnes/year MTO/P capacity has been launched • Around 10m tonnes/year of coal-methanol-olefins projects approved
Inner MongoliaInner Mongolia
NingxiaNingxia
Xinjiang
Heilongjiang
Hebei
Shaanxi
Anhui
Zhejiang
JiangsuHenan
Shanxi
Guizhou
Source: ICIS China
Going forward
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Methanol in India – a closer look!
Fahima Khail
Markets Editor –June 2014
Tehran, Iran, 7th or 8th June
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Agenda
• Market Brief• Key Price Drivers• Market Outlook
India Methanol
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Market BriefICIS assesses prices in West Cost India
• Methanol consumption in India ~ 2 million tonnes/year Imports to West Cost India 1.4-1.5 million tonnes/year
- Small part of demand met by 5 local producers
- India largely depends on imports from Iran
FY 2013-2014: imported so far until Dec 2013: 1.1m tonnes 0.77m
tonnes from Iran = ~70% from Iran
248,845 tonnes from Saudi Arabia = ~20% from Saudi Arabia
The rest from UAE, SE Asia, China etc.
Source: India Ministry of Commerce & Industry
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Application
Two major end-use segments : chemical and energy
• Chemical: production of formaldehyde, acetic acid, di-
methyl terephthalate (DMT) and a range of solvents
• Energy: blending component for tertiary butyl ether
(MTBE), tertiary amyl methyl ether (petrol and methyl
TAME) and di-methyl ether (DME)
formaldehyde sector bulk (more than 60%) of
the consumption, used in laminate, plywood,
carpeting etc.
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Key Price Drivers
External Drivers
• Market in China• Market in SE Asia
• Plant and Supply conditions in Iran and Asia
Internal Drivers• Demand in India (end-use market, seasonality, India
economy)• Domestic market in India (currency fluctuations)
• Domestic production• Vessel delivery
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Market Overview
Source: ICIS Pricing
CFR W.C. India
560/tonne
+ 54%
- 56%
CFR W.C. India 315/tonne
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Near-Term Market Trend
• Likely to remain bearish along with China and SE Asia
• Monsoon season in starting in June lower demand for
end-use product formaldehyde
• Continuous supply from Iran.
• Stable-to-soft end-user demand along with slower GDP
growth in the country
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Long-Term Market Trend
• continue to rely on Imports from Iran
• Methanol producers’ fight for gas with fertilizer, energy
generation and gas exports
• The two fastest growing regions are SE Asia and India,
driven by chemical demand.
• Increase in end-user demand
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Contributors:
Ken Yin (China methanol)
Sam Liang (China methanol)
Singapore editorial team
