Methanol anti-dumping preliminary: This result is not too cold

The picture shows the scene of the methanol anti-dumping work conference held in Beijing in July this year. At that time, more than 40 representatives of methanol anti-dumping filing units, support units, and other methanol companies attended the meeting.

Sinochem New Network News Recently, China's anti-dumping investigations on foreign methanol have finally come out. On October 25, the Ministry of Commerce issued an announcement saying that after investigation, it was found that there was dumping of imported methanol originating in Indonesia, Malaysia, and New Zealand. The industry suffered substantial damage, and there was a causal relationship between dumping and substantial damage. Therefore, starting from October 28th, 2010, when importers import methanol originating in Indonesia, Malaysia, and New Zealand, they should base their dumping margins (9.3%-37.5%) on the companies determined by the preliminary decision to China. Customs provide corresponding deposits. However, the announcement also announced that there was no dumping of imported methanol originating in Saudi Arabia.

The investigation lasted more than one year. At the end of 2008, under the influence of the financial crisis, and in the context of weak overseas demand, foreign countries began to export methanol to China in a large amount by taking advantage of cheap raw materials. Previously, from 2002 to 2008, the proportion of imported methanol in China’s domestic market fell to about 12%, while in China from January to May 2009, the amount of imported methanol in China soared, and the monthly average was close to 600,000 tons, accounting for about 1 in the domestic market. /2. According to customs statistics, China imported 5.288 million tons of methanol in 2009. Saudi Arabia, Iran, Qatar, Oman, and New Zealand ranked top five countries in terms of production and sales. They imported 1.77 million tons from Saudi Arabia and 892,000 tons from Iran. From Qatar, 416,000 tons were imported, 391,000 tons from Oman, and 329,000 tons from New Zealand.

At that time, the price of methanol from foreign countries, especially those in the Middle East, reached the Chinese port was only about 2,000 yuan/ton, forcing the domestic methanol ex-factory price to fall generally, and the cost of inversion was serious. At that time, many gas head methanol plants in Sichuan, Henan and Gansu were discontinued, and the number of loss-making enterprises exceeded 90%.

In this case, on May 4, 2009, more than 10 companies, including Shanghai Coking Co., Ltd., Zhejiang Jinju Chemical Co., Ltd., Hebei Zhengyuan Chemical Industry Group, and Anhui Linquan Chemical Co., Ltd., represented the Chinese methanol industry. China's Ministry of Commerce formally proposed methanol anti-dumping applications. The Ministry of Commerce immediately accepted and initiated the investigation. In June of that year, China began anti-dumping investigations on imports of methanol from Saudi Arabia and other four countries to assess whether China's imports of methanol from these countries were lower than the cost of production.

After the anti-dumping case was filed, the industry was very excited. Because domestic methanol companies began to fall in the methanol market price in the second half of 2008, they have been in a difficult situation. The overall operating rate of the domestic methanol industry has been very low. The industry wants to use this anti-dumping to change the market trend.

Affected by this good news, domestic methanol prices have indeed had a strong rebound, rising from RMB 1900/tonne at the lowest level in 2009 to RMB 3,100/tonne at June this year, and the operating rate of domestic methanol companies has also increased. It gradually increased from 3 to 60%. After the initiation of the anti-dumping investigation, the import volume of methanol in China from June to December 2009 has also dropped significantly. The monthly average is about 340,000 tons, which is a significant drop from the previous 600,000 tons.

When the industry was full of hope and anticipation of anti-dumping results as soon as possible, on June 23, 2010, the Ministry of Commerce announced on its website Announcement No. 38 of 2010, announcing that the case of methanol anti-dumping cases was rather special and complex, according to the Ministry of Commerce In accordance with the provisions of Article 26 of the Anti-dumping Regulations of the People's Republic of China, it was decided to extend the investigation period of this case by 6 months, that is, the deadline for the investigation of this case was December 24, 2010. At that time, many industry analysts believed that the postponement reflected the importance and complexity of methanol and related industries in China. After the news was issued, the domestic methanol spot market dropped by RMB 30/t.

In fact, as early as July 2009, Dow Jones Newswires published a news report that Saudi Arabia and China have reached a preliminary agreement to reach a settlement on China's methanol anti-dumping investigation against Saudi Arabia. The report quoted sources as saying that the two sides had achieved positive results in the consultations on this issue and reached an initial agreement on ending the dispute as soon as possible.

At that time, many people did not notice this news. Some of them noticed the letter even if they noticed it. However, the results of the preliminary announcement made recently made the content of this news a reality.

Methanol gasoline is an important application area of ​​methanol and has been pinned a lot of hope in the industry. The picture shows a large truck is being installed with methanol fuel equipment.

Why Saudi Arabia was not included in the list China is a major market for the Saudi petrochemical industry and Saudi Arabia is also the main force for exporting methanol to China. In 2009, China imported 5.288 million tons of methanol, of which 1.77 million tons were imported from Saudi Arabia. Imports accounted for the first place in all countries and regions. So why did Saudi Arabia get out of the "black list" this time?

Wang Ru, general manager of Pingdingshan Chemical Co., Ltd., told CCIN reporters that they were one of the initiators of this anti-dumping application for methanol. He participated in several investigation hearings on methanol anti-dumping. After a survey conducted by China’s foreign trade department, the situation in Saudi Arabia is indeed special. First, the natural gas resources that they use to produce methanol are abundant, the price is really cheap, and there is no problem with low-cost dumping. The second is that Saudi officials have visited China several times regarding methanol anti-dumping issues and have been seeking friendly solutions with the Chinese government. China has good relations with Saudi Arabia and Saudi Arabia has great support for China in some international affairs. Therefore, when formulating anti-dumping measures, China cannot ignore these factors.

This is also seen in the response from Saudi Arabia. After China decided to anti-dumping, Saudi Arabia’s enterprises immediately responded positively. Saudi Arabia’s largest exporter of methanol, Sabic, immediately issued a statement saying that in view of its strong relationship with China, the company will seek a friendly solution. The statement also stated that "China has not imposed protective tariffs on Saudi methanol, and we are still negotiating to overturn allegations of dumping." Less than a month after China decided to anti-dumping, in July 2009, the Saudi Ministry of Trade and Industry immediately began discussions with China on allegations of anti-dumping. In response to China's initiation of anti-dumping procedures, a delegation of Saudi trade officials and businessmen visited China at the time to discuss anti-dumping issues.

Some market participants also analyzed that since Saudi Arabia is currently the largest crude oil importer in China, the relationship with Saudi Arabia affects China’s energy security issues. In the face of this issue, the issue of anti-dumping of methanol appears to be less critical. The so-called two disadvantages are lighter.

Anti-dumping can not solve the remaining difficulties The methanol anti-dumping measures against Indonesia, Malaysia, and New Zealand should be said to have a certain positive effect on the domestic methanol market. However, statistical data show that the three countries that were found to be dumping had less than half of Saudi Arabia's exports of methanol in 2009. Therefore, this anti-dumping measure has little protective effect on the industry. The latest customs data from January to August this year also showed that Indonesia, Malaysia, and New Zealand only accounted for 9% of total exports of methanol in China; Saudi Arabia accounted for 14%. After the preliminary investigation of the anti-dumping investigation, the methanol in the Middle East may further impact the Chinese market.

An expert who did not want to be identified said in an interview with CCIN reporters that, in fact, the current domestic methanol production capacity is excessive. Even if it is determined that Saudi methanol dumping, the significance is not as big as imagined. According to experts, by the end of this year, there were 25 methanol projects under construction that were originally planned to be put into operation in China, with a total capacity of 8.16 million tons. The total domestic methanol production capacity will reach at least 29.534 million tons. In addition, there are 25 methanol projects planned or under planning in China, with a total capacity of 24.4 million tons. This year, domestic methanol demand is likely to be below the expected 21 million tons. If the methanol industry still maintains the current capacity expansion rate, by the middle of the “12th Five-Year Plan”, domestic methanol production capacity will likely exceed 50 million tons. Even if we eliminated 9 million to 10 million tons of backward production capacity during this period, domestic methanol is still in a serious surplus.

There are experts from another perspective. China's initial anti-dumping investigation did not include Saudi Arabia and other major sources of methanol imports, indicating that the Chinese government hopes to phase out some backward domestic production capacity through imports, demonstrating its determination to save energy and reduce emissions. The CCIN reporter learned from the interview with Wang Ru that their company had a production capacity of 600,000 tons of methanol, but it has been shut down since June of this year and employees have to return home. Speaking of the reasons for the suspension of production, the market downturn caused by the impact of imported methanol is the second most important reason. The main reason is that local governments must complete the “Eleventh Five-Year Plan” energy saving goals, reduce excessive production capacity, and limit the supply of electricity and natural gas. This is a constraint on methanol companies this year. The major bottleneck in production. The deputy general manager of China Sea Petrochemical Co., Ltd. Gan Qiang also told CCIN reporters that the completion of energy-saving targets is the top task for all localities. Methanol is a large energy consumer and bears the brunt of eliminating and reducing production capacity. Due to import shocks and energy-saving restrictions, the company's new 800,000-ton/year methanol plant is still unable to drive and put into production. The company will make efforts in saving energy and reducing consumption, and create maximum benefits under limited energy supply conditions.

Many analysts said that after the preliminary investigation of anti-dumping investigations, the Middle East’s supply of over 70% of the total import supply channels is not restricted. The Middle East’s methanol may further impact the Chinese market, and the domestic methanol price increase will be challenged. For domestic enterprises, the pressure of competition among methanol production companies has increased, while the cost pressure of downstream industries has weakened. Therefore, methanol companies will face the problem of how to survive and develop in the harsh environment with overcapacity. It is necessary to shift from an exten- sion-style development model that simply pursues large-scale production to an in-depth development model as soon as possible.

Experts introduced the deep processing of methanol to olefins as an example. It is understood that a major breakthrough has been made in the technology of methanol to olefins in China. About 2.67 tons of methanol can produce 1 ton of ethylene and propylene, and the cost is low. The production process of the process is short, the product yield is high, and the number of by-products is small. The investment of a 1.8 million-ton/year methanol to olefin plant is only about 5 billion yuan. This process is more competitive with existing petroleum cracking and olefins production processes. The downstream products of ethylene and propylene are numerous, and the domestic market has a large demand, which has a good development prospect for a long period of time. This is an ideal project for domestic methanol companies to solve the import impact and the overcapacity.

Saudi Arabia is the main importer of methanol in China. The photo shows Saudi Arabia's largest methanol exporter Saudi Basic Industries' methanol plant. (Image courtesy of CFP)