Factors Affecting the Asian Methanol Market
As the largest producer of methanol in the world, China has a significant impact on regional markets.
The two directions driving Covid policies within the Asian region consist of China and outside of it. In early April, many Southeast Asian countries like Korea started to reopen their borders to encourage people to resume normal life in early April. While China is still following the zero-case policy and continues with ongoing or partial lockdowns. Which continues to affect the trading chemical transportation and discharging activities.
However, we expect new policies to be implemented with less restrictions which would be implemented in the future.
On top of Covid, energy pricing is the critical driver for today’s national price movement. The association between China’s coal price and the national price increased in the second part of May and used to be seven and a half of 2021. China’s coal prices are estimated to remain strong in the short term. With the high coal demand during the wintertime and the related tight supply. The methanol prices are supposed to go back to follow the market fundamental after the energy price stabilizes. Demand generation is less than previously expected. The European natural gas risk results in high energy prices; however, the high feedstock price is hard to pass to others. High inflation started to impact Asian countries, putting demand for growth at risk. Severe delays affected the MTO project’s starting time and slowed the construction progress.
In other regions, China was supposed taking the lead in near-term economic growth, but the growth was held back by the strict covid control policies, economic slowdowns, and serious RMD depreciations.
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Chemical Market Analytics by OPIS, a Dow Jones Company