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Insight | Time:May 14 2018 3:02PM
Impact of macroeconomic news on methanol market
 
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Environmental protection inspection prior to Shanghai Cooperation Organization summit

The Shanghai Cooperation Organization (SCO) summit will take place in Qingdao City of Shandong Province from Jun 9 to Jun 11. The environmental protection regulation turns stricter prior to the summit in some provinces, especially in Shandong and North Jiangsu. In a response to environmental protection, Jiangsu Weitian and Yizhou Coal Coking in North Jiangsu had shut their methanol plants which were based on coke oven gas as feedstock.

Methanol’s downstream industries are also reeling from stricter environmental protection. Traditional downstream industries are concentrated in Shandong where there are many formaldehyde, MTBE and further downstream plywood plants. Plywood plants are currently under pressure and operating rates are kept low. Demand for methanol from traditional downstream application is poor.

US withdrawal from Iran nuclear deal drives oil price higher

US President Donald Trump announced that he has withdrawn from the Iran nuclear deal and is set to renew sanctions on Iran. Crude oil keeps spiking up, with WTI futures rising above $70/bbl on May 7.

Firstly, methanol market sentiment is strengthened by higher crude oil. Secondly, the increase in oil price is fed into downstream PP, PE and MTBE markets, which in turn has a knock-on effect on methanol price. The buying interest in feedstock methanol gets boosted by better economics.
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