Summary: Methanol prices have recently been lifted sharply, with the inland market and the futures/paper market reinforcing each other. With the Strait blocked, the near-month methanol situation remains intractable. As of the time of writing, both the September and October futures contracts hit intraday highs above 3,000 RMB/tonne. This round of rally is fierce, second only to ethylene glycol. Although floating storage and inventories in the Strait remain at high levels and are still building, the largest sanctions in U.S. history and the continued severe blockade of the Strait have become the sole core logic underpinning the unsolvable methanol spot market.
According to Chempricehub data, methanol import arrivals are expected to be 738,300 tonnes in August. Weaker unloading efficiency due to weather, the Strait blockade, the closure of the arbitrage window caused by the strong inland market, and the reopening of the export arbitrage window have together led to port inventory accumulation in August falling short of initial expectations. As of now in August, only 120,000–160,000 tonnes of cargo have sailed out of the Strait. Combined with Saudi shipments again dropping to zero after the Strait blockade and the reduction from Malaysia's Petronas plant maintenance, September methanol import supply expectations have been revised down to around 400,000 tonnes (if the Strait situation changes over the next week, we will adjust the September forecast accordingly).
Inventory builds below expectations and low import supply strongly support the bullish thesis. In this round of rally, the momentum has been driven by participants both within and outside the industry, with positive carry positions and outright long positions delivering notable performance. With methanols' sharp price rise, olefin margins have retreated significantly, and close attention should be paid to any changes in future olefin plant start-up intentions and their purchasing moves. As of the time of writing, crude oil has eased slightly; the Strait situation remains the most critical factor shaping future market direction. Port inventories are expected to fall again to between 500,000 and 550,000 tonnes by mid-September. Given limited cargo liquidity, watch for basis movements in Taicang paper contracts going forward.
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