The spot price of methanol in China has hit a yearly low, according to recent data. As of December 26, the domestic average price of methanol stood at 2,567 yuan per ton, marking the lowest level seen throughout the year. Since October, the price has been on a steady decline, dropping by 7.48% over the past few months.
Currently, methanol prices vary across different regions. In Shandong, the price ranges from 2,400 to 2,550 yuan per ton, while in Hebei, it has fallen to between 2,400 and 2,450 yuan per ton. In Shanxi, the price is now 2,350 to 2,470 yuan per ton, and in East China, port prices have dropped to 2,690 to 2,790 yuan per ton.
This price drop coincides with a decline in coal prices, which is a key input for methanol production. The Bohai Rim thermal coal index currently stands at 634 yuan per ton, down from 807.5 yuan per ton at the start of the year. This reduction in input costs, combined with weak demand from downstream industries, has put further pressure on methanol producers.
Formaldehyde, one of the main downstream products of methanol, has been significantly impacted by real estate market regulations. The national operating rate of the dimethyl ether industry is currently around 38.47%, showing a lack of strong demand. In Hebei, some manufacturers are now selling at or near cost, forcing some to reduce output or temporarily shut down operations. Meanwhile, the acetic acid market has also declined by 11.35% since October, with the current average price at 2,890 yuan per ton.
Wang Min, a business analyst, notes that winter is typically a slow season for methanol demand, and with increased supply expected in the coming months, the outlook remains uncertain. From January to November 2023, China's cumulative methanol production reached 23.753 million tons, up 30.8% compared to the same period last year. New capacity is also set to come online in early 2024, including 600,000 tons from Shaanxi Lutianhua and another 600,000 tons from Jinchengtai.
Despite the current challenges, long-term growth prospects for the methanol industry remain positive. The development of alcohol-based fuels and the methanol-to-olefins (MTO) process is expected to drive demand and help the sector recover from its current downturn.
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