Methanol: advance price

On October 14th, the main methanol 1501 contract opened higher and higher, and the focus of futures prices moved up significantly. The closing price closed at 2,659 yuan/ton, which was greatly reduced compared to the spot premium in East China. Based on the current structure of the current price spread, we believe that the market's short-term sentiment has been vented, and the short-term price continues to fall.

High inventory at port will become normal during the year

In mid-September, some of the methanol plants for early phase parking in the Middle East and Southeast Asia were successively restarted, including 1.65 million tons per year for Iranian Petrochemical and 1.7 million tons per year for Malaysian Petroleum Corporation. The anticipated increase in imports made it difficult for stocks that were difficult to effectively transmit downstream.

At present, CFR Southeast Asia's methanol price is 404 US dollars / ton, CFR China methanol price is 361 US dollars / ton, the price difference between the two is 43 US dollars / ton level. Due to the weak balance between methanol supply and demand, the spread has not been substantially expanded, and the profitability of the export market has been limited, which also makes it difficult for the export to become an effective kinetic energy for the storage of ports in South China and East China ports. Undoubtedly, the greater inventory pressure makes the South China and East China port market mentality relatively weak, the spot price of methanol tends to fall or rise, traders dare not push up prices, so the spot price of the port oscillated narrowly around 2,600 yuan/ton.

Judging from this year's methanol trade pattern, the conditions for the backflow of goods from South China and East China ports into the Mainland are not yet fully met, and the traditional downstream downstream of high-inventory digestion is relatively limited. Therefore, the high inventory of ports during the year will become the norm with methanol in the Mainland. The growing demand creates checks and balances.

Crude oil declines sharply and olefin plant profits are frustrated

As WTI and BRENT crude oil prices fell below US$85/barrel one after another, the cost advantages of coal and petrochemical plants and traditional naphtha-based PE and PP production processes were reduced, and the price of electricity transmitted to PE and PP declined rapidly to make coal-based olefins. The profit compression. In the short term, the weakness of crude oil is difficult to ease, some of the olefins that have been launched have suffered setbacks in profits, and new olefins that are put into operation have been delayed. According to the plan, coal chemical projects will be successively put into operation from the end of this year to the beginning of next year. From the perspective of expectation, the new downstream purchase volume will be the main driving force for follow-up market demand. At present, the Ningxia Shenhua Ningxia Coal Co., Ltd. will maintain stable purchases, and southern Shandong's olefin plant is expected to start purchasing in late October.

Local supply and demand balance affect the market outlook

Data show that in August China's methanol production was 3.579 million tons, an increase of 46.4%; from January to August the cumulative production of refined methanol 24,426,000 tons, an increase of 29.4% over the same period last year. Based on this calculation, due to the concentration of partial plant overhauls in September, methanol production will decline, and production in October will return to a high level, which is in line with August.

At present, besides the centralized overhaul of installations in the Henan area, Yantai Mining, Ordos, and Rongxin have annual capacity of 900,000 tons of coal-to-methanol plant during the National Day period, and are expected to restart on the 20th. Therefore, the start of olefin demand in northwestern and Shandong areas will be an important factor in relieving the contradiction between local methanol supply and demand. The conduction effect of the spot price is different from the previous year's port-to-inland transmission, and it has turned into a hub in Shandong and radiated to the East China, South China ports and the northwest and north China.

In operation, it is recommended that the short position be properly played, and the price will continue to fluctuate after the low price oscillation. Based on the supply contraction and the purchase expectations for newly-built olefin plants, it is possible to allocate more than one short position.