Methanol is known as a main product in petrochemical industry which is used in various products such as fuel and producing acetic acid, formaldehyde, solvents, methylamines, methyl methacrylate, propane and olefin. Based on last data which is published by Methanol Market Services Asia (MMSA), the world nominal capacity of methanol was 132.78 million tons in 2017. Iran as one of the biggest producers of methanol in the world, covers about 3.8% of global nominal capacity. The mentioned capacity in Iran will increase by running some methanol development plan projects including Kaveh and Marjan and some others in the near future. Generally, the prices of coal and oil as feedstocks, Dollar Index, the amount of supply and demand consider as the main effective factors on methanol price. In this regard, the price of methanol regressed on the mentioned factors by Eviews software. It was observed that, the coefficient of mentioned variables and F-Statistic of model were highly significant in one hand and the model’s T-Statistic was about 2 on the other hand. So, the below equation was achieved as methanol price model:
Methanol= -0.96 C + 0.91 Oil + 0.41 Coal + 3.12 Demand – 2.87 Supply
And the chart below shows the results of writer’s survey on methanol model by using Eviews:
Based on probability’s result, the most effective variable on methanol price are the amount of supply and demand, the oil price and the coal price respectively.
The recent downward trend of oil started from 1st November, which have been unprecedented over past 36 years. The main reasons of this decline return to president Trump’s statement on the non-interference of Saudi Arabia in the death of Khashoggi, increase in global supply of oil by countries like Russia and KSA and finally Trump’s decision to keep oil price down in order to increase stability in U.S. economy and therefore execution of interest rate cuts. The daily chart of oil price during past three years are shown below:
In the following, the trend of methanol price during last three months is shown:
As it is pointed above, the descending trend of methanol and oil prices occurred at the same time. As a result, the methanol price of CFR China decreased to 270 Dollar per ton in current day while oil price hit under 60 Dollar per barrel.
To conclude, because of the correlation between methanol and oil price, the recent drop in oil price led to decrease in methanol price from more than 400 Dollar per ton to under 300 Dollar per ton. As a result, the methanol producers face a crisis in the current situation. In this regard, the table below illustrate the relation between changes of methanol price and companies’ profitability in Iran. (The information of Zagros Company and Kharg Company in current financial year are used for this survey):
As it’s shown, decreasing in global methanol price led to lower Earning per share in the big companies’ financial statements. In order to reduce this problem, the companies have to plan to complete their value chain and as a result, lower global risks like downturn in global markets in the near future.