According to the latest report released by the U.S. Energy Information Agency, U.S. crude oil production jumped to the top of the world in 2018, 45 years later, according to Lianhe Zaobao.com. In 2017, its crude oil production ranked third after Russia and Saudi Arabia, but with the increase of shale oil production, production increased by about 20% compared with 2017, surpassing the two countries. In the world energy market, the sense of existence of the United States may be further enhanced.

According to a report released on March 26 by the U.S. Energy Information Agency (EIA), US crude oil production is 17% higher than in 2017, reaching an average of 1.95 million barrels per day. Russia’s (10.75 million barrels) and Saudi Arabia’s (10.42 million barrels) output also increased by 2-3% compared with 2017, but the United States grew faster.

According to data from oil giant BP, the United States surpassed Russia and Saudi Arabia in 2014 in terms of production of natural gasoline, including shale gas. This is the more rigorous U.S. Energy Information Agency statistics, since 1973 again jumped to the top.

On March 26, the phthalic anhydride commodity index was 65.69, down 0.33 points from yesterday, down 45.32% from the peak of 120.13 points in the cycle (2012-02-28), up 35.67% from the low of 48.42 points on January 21, 2016. (Note: Period refers to 2011-09-01 to date).

Recent domestic phthalic anhydride market price fluctuations, the East China phthalic anhydride market weak consolidation, downstream factories to maintain just needed procurement, factory inventory pressure continued, high-end transaction hindered, on-site neighbouring source negotiations mainstream in 6600-6800 yuan/ton, naphthalene source negotiations mainstream in 6400-6500 yuan/ton; North China phthalic anhydride market mainstream offer in 6500-6800 yuan/ton, the market weak shock. The price of phthalic anhydride in China is stable, the spot supply of phthalic anhydride is normal, the market is not good, and the price trend of phthalic anhydride remains weak.

Recently, the executive price of the upstream product of phthalic anhydride, Sinopec o-phthalic anhydride, is 6800 yuan/ton. The actual market transaction price is 7100 yuan/ton. The quotation is stable and the port is out of stock. Upstream raw materials mixed xylene price shocks maintain stability, phthalic turnover is general, port phthalic inventory is low, phthalic external quotation rises, import phthalic cost rises, the actual transaction price talks in detail, upstream price trend is stable, phthalic anhydride market prices remain volatile. DOP prices in the downstream are lower. Recently, in Zhejiang DOP market, merchants’quotations have fallen to 8100-8200 yuan/ton, and downstream prices have been declining. Demand for upstream phthalic anhydride is limited. The market price of phthalic anhydride is slightly lower. It is expected that the market price of phthalic anhydride will be around 6700 yuan/ton in the later period.

Price Trend

According to the monitoring data of business associations, as of March 26, the average price of domestic cyclohexanone market was 9,700 yuan/ton, and the domestic market of cyclohexanone continued to decline.

II. Market Analysis

Products: Domestic cyclohexanone market continued to decline, downstream chemical fiber orders intention is not strong, manufacturers continue to decline in external quotations, solvent market just need to purchase, solid single turnover is weak. The mainstream offer of cyclohexanone in North China market is delivered in cash from 1000 to 10200, the mainstream offer in East China market is delivered in cash from 10200 to 10500, and the mainstream offer in South China market is delivered in cash from 10500 to 10700.

Industry Chain: Pure Benzene: Eastern China’s pure benzene trade is on the low side, buying 4650-4700 yuan/ton in March, selling 4710-4800 yuan/ton. Purchase price in April is 4650-4700 yuan/ton and sale price is 4720-4800 yuan/ton. May buy 4670-4700 yuan/ton, sell 4800-4850 yuan/ton. Caprolactam: The mainstream of caprolactam liquid spot market is stable. At present, the polymerization capacity is large, and the caprolactam factory is relatively strong. However, due to the recent limited production and price guarantee of the polymerization plant, the supply and demand of caprolactam are relatively balanced, and the northern part of the spot transaction is weak. The spot price of caprolactam liquids is maintained at 13800-14000 yuan/ton and delivered by acceptance. On the solid side, downstream delivery is cautious, with the price ranging from 1450 to 14600 yuan/ton, which is remitted to us now.

3. Future Market Forecast

Pure benzene market is relatively stable, cost support is still acceptable; downstream chemical fiber market in Nanjing Oriental recently planned maintenance, the demand for cyclohexanone or slightly reduced. Cyclohexanone analysts, business associations, predict that the domestic market for cyclohexanone will continue to fall in the short term.

According to the monitoring of business associations: on March 25, the market of hydrogen peroxide continued to rise, with the average price of 1010 yuan/ton in the domestic market rising by 3.32%.

Towards the end of March, downstream factories resumed operation, terminal demand improved, and hydrogen peroxide market continued to rise. Hebei’s price has exceeded 1000 yuan/ton, and the mainstream price is 1050 yuan/ton, which is 50 yuan/ton higher than last week. Shandong mainstream quoted 980-1010 yuan/ton, the price increased by 80 yuan/ton. Anhui mainstream quoted 1100 yuan/ton, the price increased by 50 yuan/ton.

Business Club hydrogen peroxide analysts believe that: increased demand, improved market turnover, future market hydrogen peroxide market can be expected to rise.

In 2018, the price of lithium carbonate fell sharply, and the lithium industry of Metro Energy (600175) layout was frustrated.

Metropolitan Energy announced in the evening of March 20 that Metropolitan Energy and the former shareholders of Riverford Lithium Industry had recently signed the Agreement between Metropolitan Energy Co., Ltd. and former shareholder Wang Mingyue of Riverford Lithium Industry Co., Ltd. and the management team to terminate the acquisition of shares of Shandong Riverford Lithium Industry Co., Ltd., Metropolitan Energy Co., Ltd., Liang and Guo Chengyun on the termination of the acquisition of Shandong Riverford Lithium Industry Co., Ltd The main content of the agreement is that considering the current market environment and other factors, the two sides intend to terminate the “Agreement on the Cash Acquisition of Shares of Shandong Ruifu Lithium Industry Co., Ltd. by Mei Dunyuan Co., Ltd.” The original management team of the target company repurchases the 56.18% of the above total shares. After the completion of this transaction, Metro Energy also holds 14.86% of the target company’s equity. Metropolitan said that the company has started to negotiate with other original shareholders of the standard company and will withdraw from Riverford Lithium completely after agreements with other parties have been reached.

On March 23, 2018, Mei Dunyuan passed the bill of “Agreement on Mei Dunyuan Company Limited’s Cash Acquisition of Shares in Shandong Ruifu Lithium Industry Co., Ltd.” It plans to purchase 98.51% of the total shares of Shandong Ruifu Lithium Industry Co., Ltd. for 2.9 billion yuan in cash. In 2018, 2019 and 2020, the betting performance of the two sides is not less than 420 million yuan, 450 million yuan and 480 million yuan, respectively.

Metro Source said Wang Mingyue and his management team had to pay compensation to listed companies for their performance in 2018. According to the preliminary audit of Listed Companies in 2018, the performance compensation is about 900 million yuan. According to the original cash acquisition agreement, Metro Energy still has 1 billion yuan of equity transfer to pay to Wang Mingyue and the management team in the next three years.

As for the specific reasons for the termination of the acquisition, Metropolitan explained that since March 2018, when the company signed the relevant equity acquisition agreement with the relevant counterparty, the market environment has changed greatly. In order to terminate the acquisition, the company took into account many factors, such as the target company and the current market environment, and made a decision after demonstration and research, and has already made a decision with the counterparty. Full communication and friendly consultation to reach an agreed result.

On the same day, Metropolitan announced receipt of the Shanghai Stock Exchange’s “Question Letter on the Termination of Metropolitan’s Acquisition of Riverford Lithium Industry”, and the Shanghai Stock Exchange asked about the rationality of the termination of the acquisition, the performance of Riverford Lithium Industry, and the high premium acquisition of the previous listed companies.

It is noteworthy that Metro Source covers real estate, oil, finance, new energy, commerce, hotels and so on. On the evening of July 25, 2018, Metro Source announced that the company intends to transfer the shares of 12 major subsidiaries of its real estate business sector to Deqing Wanli Real Estate Development Co., Ltd. in cash; and to transfer the shares of Metro Source (Singapore) Co., Ltd. The right is transferred to Deqing Caitong International Trade Co., Ltd. in cash. In the future, we will focus on the development of new energy business.

According to Metro Source’s official website, in the field of new energy, the company has initially completed the layout of the new energy automobile industry chain upstream from “lithium carbonate-lithium battery ternary cathode Material-Ternary power lithium battery”.

The company has acquired 60% of Haichuang Lithium Electricity, and currently has 12,000 tons of precursor capacity and 6,000 tons of cathode material capacity. Another 20,000 tons of ternary precursor project and 20,000 tons of ternary cathode materials are under construction. In March 2018, Haichuang Lithium Power Co., Ltd., Meidu, started construction of a new energy lithium battery material project with an annual output of 50,000 tons. After completion of the project, the annual production capacity of ternary precursor is 54,000 tons, that of ternary cathode material is 50,000 tons, and that of anhydrous sulfuric acid is 80,000 tons.

The company has acquired Delanen Power mainly engaged in lithium battery business. By the end of 2017, Delanen has three production bases, Zhangjiagang, Shanghai and Ningbo, with a total capacity of 2.5 Gwh.

Despite the increase in international crude oil prices in 2018, many Latin American countries are still struggling to cope with the debt crisis and oil and gas production is declining. Recent discoveries of oil and gas and licensing rounds in the region have attracted strong growth in foreign investment, which may be the key to the region’s economic recovery.

Argentina: Pushing Shale Development

Argentina is trying to boost oil and gas exploration and production because of high inflation and declining oil production. Argentina has abundant shale reserves. Although in recent years it has also changed from a major net exporter of natural gas to a net importer, the government is vigorously promoting the development of shale resources in order to help the energy industry out of its predicament.

It is reported that the Vaca Muerta shale in Argentina’s Neuken Basin contains 16 billion barrels of oil and 308 trillion cubic feet of recoverable natural gas. Many international oil giants and investors are showing more interest in the area.

In 2017, the German Wintershall Company launched the first of three horizontal directional wells in Bandurria Norte block, Sinaiuken Basin. According to the company, up to now drilling activities are still mainly concentrated in conventional oil and gas reservoirs.

Several oil giants have also cooperated with Argentina National Petroleum Corporation (YPF) in shale exploration. Equinor and YPF signed an agreement that each of the two companies holds a 50% stake in oil and gas exploration in Western Argentina. In addition, major oil and gas giants are investing $1.15 billion in the development of Vaca Muerta reservoir. YPF, Total, Wintershall and Pan American Energy decided to invest jointly. Total owned 41% and was responsible for exploration and development in the east of Aguada Pichana, while BP owned 45% of Pan American Energy and operated the west of Aguada Pichana and the Aguada de Castro block.

ExxonMobil is another oil giant actively involved in the development of Argentina’s Neuken Basin. The company said it has invested more than $500 million in the exploration and development of its Vaca Muerta assets since it entered the region.

Venezuela: ambitious plan

Although Venezuela has the largest oil and gas reserves in the world, it has failed to maintain its position as the largest oil exporter in the Americas. Since President Nicolas Maduro took office in 2013, oil and gas production has fallen sharply. The situation deteriorated further in 2018, with crude oil production falling from 2.15 million barrels per day to 1.25 million barrels per day in the third quarter of 2018, compared with about 3 million barrels per day five years ago.

Recently, the production of overweight crude oil in the Orinoco Belt has been helping Venezuela’s oil industry to survive. Located in Gurigo, Venezuela, the heavy oil belt has the largest oil reserves in the world. By the end of 2017, however, Orinoco’s oil production had fallen to 82,200 barrels a day, down more than 300,000 barrels a day from the previous year. It has been reported that the decline in production is partly due to the decline in the quality of Venezuela’s oil, including high salinity and high water content. Meanwhile, Venezuela National Petroleum Corporation (PDVSA) continues to suffer from debt problems due to its operation and cash flow problems.

However, PDVSA has ambitious plans for the future and expresses its hope to increase Venezuela’s oil production to about 6 million barrels per day by 2019, of which 4 million barrels per day are expected to come from the Orinoco heavy oil belt. The company’s plan calls for a substantial increase in natural gas production by 2019, aiming to reach 10.5 billion cubic feet per day. Meanwhile, by 2019, we hope to achieve the target of 1.3 million barrels per day of oil exports to Latin America and the Caribbean and 3.2 million barrels per day of oil exports to Asia.

Brazil: Deepwater Oil and Gas Favored

Brazil’s subsalt oil remains a target for explorers. As Latin America’s largest country, Brazil’s influence on the future international energy market continues to grow. Fatih Birol, Director of the International Energy Agency (IEA), stressed that the country has set an example for the rest of the world in its “firm and ambitious long-term energy policy, deep-water oil resources development and biofuel production expansion”. According to the IEA, Brazil’s net oil exports are expected to reach 1 million barrels per day by 2022. This is the result of a 50% increase in the country’s oil production over the past 10 years, largely due to the development of deep-water oil resources.

Libra Oilfield is the deepest oil reservoir in the world. It began production in November 2017. Shortly afterwards, the Libra consortium of Petrobras, Shell, Daudal, CNOOC and PetroChina confirmed the commerciality of the northwestern oil and gas reservoirs in the block, known as Mero Oilfield. Petrobras said the new field estimated 3.3 billion barrels of recoverable oil. The development plan for the Muro oilfield in Rio de Janeiro, located in the Santos Basin, includes four new production systems. According to Dodar, Libra will produce more than 600,000 barrels a day in the next few years.

In April 2018, Petrobras announced the start of production of Bzios Oilfield, one of its major subsalt oil projects. The report says four more production platforms are planned to be built by 2021 because of its high production potential.

Guyana: Hope to come back

With ExxonMobil’s major discoveries of oil and gas, Guyana has become a hot spot for oil majors. Guyana is not yet an oil producer. However, Wood McKenzie, an energy consultancy, says it expects to become one of Latin America’s largest producers by 2026, with production expected to reach 350,000 to 400,000 barrels a day.

ExxonMobil’s offshore Liza oil field in Guyana has a resource of 2 billion to 2.5 billion oil equivalents and is expected to start production in 2020. ExxonMobil discovered 59-foot-thick high-quality oil-bearing sandstone in well Payara-2, confirming that it is expected to become the second giant oil field in Stabroek block. The estimated resources of Payara oilfield have increased to about 500 million barrels of oil equivalent.

The largest nickel producer in the Philippines Nickel Asia Corp said it expects shipments to be the same in 2019 as last year, but plans to increase domestic sales to maximize profits.

As the world’s second largest nickel supplier, Nickel Asia accounts for about half of the world’s nickel ore production. Its ore is exported to customers in China and Japan who process it into stainless steel and use it for battery materials.

However, Emmanuel Samson, Senior Vice President and Chief Financial Officer of Nickel Asia, said that after lifting the ban on metal exports to China in 2017, Indonesian miners began to challenge the status of Philippine miners. Indonesia’s largest nickel producer has been increasing exports to China, while Chinese buyers prefer Indonesian ore because of its higher grade.

To compensate for the loss of market share in China, Nickel Asia will increase shipments to its two Philippine smelters. These factories used to buy ore linked to LME prices and then ship it to Japan for further processing into “first-class” nickel.

He said that this year’s nickel ore sales will be roughly equal to 19.3 million wet tons in 2018, up from 17.7 million wet tons in 2017.

The company operates four of the 30 nickel mines in the Philippines. The company’s net profit rose 9% last year to 3.01bn Philippine pesos ($57.1 million), up from 2.77bn last year, largely due to the rise in LME prices.

In 2018, the average price of nickel sold by LME to the two domestic processing plants was $5.95 per pound, compared with $4.67 in 2017.

On the other hand, the unprocessed pulp shipped to China last year accounted for 60% of the company’s total sales, 11.54 million wet tons, up from 9.64 million tons in 2017, although the average price fell to $21.53 from $24.42 the previous year.

Samson said that in order to benefit from the rising price of LME, Nickel Asia may increase its domestic business related to LME to 45% – 50%, and reduce its exports to China to 50% – 55%.

Nickel Asia is the only nickel miner in the Philippines with ownership of a processing plant, which makes the company “unique” compared with other Philippine miners. Nickel Asia’s fifth mine, Dinapigue, was acquired in 2015 and is still in exploration and development. The company expects shipments to begin next year or 2021, but does not disclose the estimated production.

Global metal producers expect nickel demand for electric vehicle batteries to grow substantially in the next few years.

Abstract:

Methanol futures prices fell under pressure, the focus of gravity continued to explore, falling below the important support level of 2530, and further fell. Short positions in the market increased and major methanol contracts closed down for four consecutive trading days. Influenced by the decline in the futures market, the domestic methanol spot market was weakly adjusted and the negotiation price was loosened. Enterprises in the main production areas of Northwest China have poor shipments, and their quotations have been lowered. Recently, the overhaul of enterprises has increased, and the operating load of methanol plant has decreased, but the impact on the overall supply is not significant at present. Domestic transport costs have been reduced, and the cost of methanol delivery has declined, but the enthusiasm for purchasing in the downstream market is not high. The olefin plant just needs to be stable, the traditional demand performance is not good, and the overall demand for methanol is low. Downstream factories mainly digest the inherent stock, and take the goods at a low price. Some imported and domestic cargo arrived and discharged at port, but the volume of discharged cargo in coastal areas decreased positively. Methanol port stocks digested slowly and continued to accumulate, increasing to 1.13 million tons, a new year high, close to the peak of 11.516 million tons in September 2016. Parking and maintenance of equipment in the international market, production reduction, stable consolidation of the Asian region, continued to catch up in Europe and the United States, the outer plate of coastal areas to form a certain boost. The arbitrage window between coastal and inland areas is closed, and the shipment of inland enterprises is not smooth. Methanol inventory pressure does not decrease, depress the price trend. Additionally, tax cuts began on April 1, and the industry’s expectations for the long-term trend were low. At present, the market lacks good stimulation and the futures price of methanol has fallen sharply. In the later stage, the overhaul of the production unit is concentrated or the methanol is driven upward. In the short term, we should pay attention to whether methanol can fall below the target of 2450.

I. Reduction of Transport Expenses

Recently, due to the impact of lower transport costs, the cost of methanol delivery has been reduced. Domestic methanol freight has continued to fall by 10-50 yuan/ton. However, the enthusiasm of downstream enterprises to take goods has not improved. Maintaining just needed procurement is the main task, and the turnover is weakened. The freight rates of Inner Mongolia North Line to North Shandong refer to 160-200 yuan/ton; South Line to North Shandong refer to 160-170 yuan/ton; Shanxi part to North Shandong 100-110 yuan/ton; Guanzhong to North Shandong refer to 90-120 yuan/ton, to South Shandong 90-120 yuan/ton; Xinjiang to North Shandong refer to 610 yuan/ton.

II. Closing of Arbitrage Window

In March, the price gap between the coastal methanol market and the mainland market converged sharply, and the arbitrage window closed gradually, which hindered the mainland manufacturers from discharging goods to a certain extent. The flow of domestic goods to coastal areas has been reduced. Enterprises are mainly active in delivering goods, and some of the quotations have been adjusted.

3. Downward trend of spot weakness

In the early stage, the trend of methanol in the mainland was strong, and the coastal market was difficult to ascend. Recent domestic methanol spot market trend has changed, the mainland narrowly declined, and the coastal market center of gravity has increased. Parking and maintenance of downstream devices in some areas, formaldehyde enterprises in Shandong Province started to decline significantly, and downstream enterprises have resistance to high-price supply. The market climate has cooled down, and the enterprises in the main production area sign orders smoothly, but the shipment situation is general, which is not as good as the previous level, and some manufacturers’quotations are narrowly adjusted. The futures market suffered a setback, the confidence of market participants was hit, the operation was cautious, and the methanol market lacked volume. At the beginning of the week, enterprises in the main production areas of Northwest China offered few quotations and took a wait-and-see attitude.

IV. The Outer Plate is Steady and Rising

The global methanol market rose steadily, the Asian region consolidated steadily, and the European and American regions continued to catch up. The methanol outer disc of China shows interval arrangement. But the spot arrival in Hong Kong is still in demand. The rest of Asia is mostly in stable consolidation: South Korea lacks real transaction information; Taiwan is running steadily and lacks large fluctuations; there is still a supply gap in non-main ports in Southeast Asia; and India’s demand is tepid. The methanol market in Europe and the United States continued to rise, which was affected by some Venezuelan plants’parking and maintenance and slightly limited outgoing shipments. The market in the United States continued to rise, but two sets of local methanol plants with an overall capacity of 2.75 million tons/year resumed stable operation in the United States. The European region also rose steadily and positively, with a few important factories filling empty deliveries and the focus of delivery rising.

Fifth, the decline of industry start-up

The start-up load of domestic methanol unit is 70.42%, which is 0.92% lower than that of the ring-to-ring ratio; the start-up load of Northwest China is 79.10%, which is 1.36% lower than that of the ring-to-ring ratio. Although some methanol plants in Shandong and Hebei have resumed operation, some of the methanol plants matched with olefins in Northwest China have stopped or reduced their load, and the start-up level of methanol has declined. In the latter stage, the number of overhauls increased and the operating load of methanol plant decreased further.

6. Slow stock digestion

The olefin plant just needs to be stable, but the traditional demand performance is not good, and the overall demand for methanol is low. Some imported and domestic cargo arrived and discharged, but the volume of discharged cargo was shrinking actively, and inventory continued to rise. The inventory of methanol port is slowly digested and continuously accumulated, increasing to 1.13 million tons, a new high in the year, approaching the peak of 11.516 million tons in September 2016, and the overall available supply is estimated to be around 278,000 tons. Downstream enterprises mainly take goods on demand, procurement is not active, the effect of inventory removal is not ideal. The high inventory of methanol ports has depressed the trend of methanol.

On March 17, the ammonium nitrate commodity index was 107.02, which was the same as yesterday. It was 9.63% lower than the cyclical peak of 118.42 points (2019-01-15), and 38.32% higher than the lowest point of 77.37 on October 31, 2016. (Note: Period refers to 2013-02-01 to date)

Recently, the price trend of domestic ammonium nitrate Market has maintained a low level. Affected by environmental protection control, domestic ammonium nitrate plants shut down more, and domestic ammonium nitrate plants started less. However, with the warming of the weather recently, the influence of northern air limitation disappeared. In addition, due to the complete shutdown of domestic downstream civil explosion industry, domestic ammonium nitrate manufacturers have more stockpiles and the price trend in the field has declined. As of the 14th, domestic ammonium nitrate market price negotiations in 1900-2100 yuan/ton, affected by environmental protection, so now many manufacturers in many areas are forced to limit production or stop production and maintenance to accept environmental protection inspection, the price trend of ammonium nitrate on the site is weak.

Recently, the domestic nitric acid price trend is temporarily stable, up to 18 days, the market price is 1560 yuan/ton. The stable trend of nitric acid price has little effect on the ammonium nitrate market, while the price trend of ammonium nitrate has slightly declined. The price trend of upstream raw material liquid ammonia has risen slightly, up to 18 days, the market price of liquid ammonia is 3240 yuan/ton. The rising trend of upstream raw material price has a certain positive impact on the ammonium nitrate market. Ammonium nitrate market price trend slightly lower. At the end of the peak season of the downstream civil explosion industry recently, the demand for ammonium nitrate has weakened and the stocks of ammonium nitrate manufacturers have increased, but the liquid ammonia market is on the rise again. The ammonium nitrate Market has slightly declined due to the bad market. Ammonium nitrate analysts believe that the price of raw materials in the upstream market has risen slightly in the near future, but the demand in the downstream market is not good. They expect that the market price of ammonium nitrate in the later period will decrease slightly.

Core view

In the medium and long term, spring inspection of foreign installations has been carried out one after another, and the depot of ports in the future is expected to be speeded up.

Next week, the focus will be on the 600,000 tons MTO plant of Jiutai Phase II in Inner Mongolia. If it can be put into operation smoothly near March 20, the circulation supply of both the northwest inland and Shandong market will be further reduced, which should be a great advantage for methanol demand.

It is expected that by the end of March, with the gradual implementation of spring inspection of upstream units and the launch of new MTO devices, methanol is expected to rise again, MA1905 reference range 2500-2650.

Bulk internal reference: What do you think of the recent volatility of methanol?

Zhao Fei: Recently, the overall fluctuation of methanol has been relatively large. It has risen sharply at the beginning of the month and once approached the limit. On the one hand, the overall atmosphere of chemical products has improved. On the other hand, the market is more satisfied with the anticipated spring inspection of installations in March-May and future port depot, which makes the methanol in the mainland stronger and makes the arbitrage windows of the mainland and ports closed, and drives the price focus of the port to move up. However, under the influence of external factors, downstream profits shrink sharply, which makes the traditional downstream and emerging downstream start-up rates fall to a certain extent, the continuous outflow of overlapping hedging sources, futures prices show a trend of soaring and falling.

Volume internal reference: When do you think this increase in methanol will last? Can you give us an analysis of the following market?

Zhao Fei: At present, the trend of methanol is basically in line with our expectations at the beginning of this month.

Supply side

Mainly concerned about the spring inspection of upstream units and the impact of production limitation of coke oven gas units, which mainly concentrated in late March to May. Some coal head units in Northwest China will take the lead in overhaul, including Rongxin 900,000-ton unit in Inner Mongolia, Jiutai 1 million-ton unit and Shanxi Tongshan 600,000-ton unit, involving more than 6 million tons of production capacity, and will gradually be realized in late March. In addition, due to the influence of Linfen in Shanxi Province on the production restriction of coking enterprises, including Shanxi Coking, Hongyuan in Shanxi Province and Wanxinda in Shanxi Province, the methanol plant from coke oven gas stopped for about one month at the end of February, with an estimated capacity of about 800,000 tons, which has been basically realized.

Inventory aspects

With the recent narrowing of the price gap between China and Southeast Asia and the gradual closure of the entrepot window, the inventory of Eastern China’s methanol ports increased significantly this week due to the arrival of some large vessels. The total inventory increased to 648,000 tons, an increase of 48,000 tons annually. Among them, the weekly inventory of Taicang area increased by 35,000 tons, while the overall circulatable methanol supply in coastal areas (Jiangsu, Zhejiang and South China) was near 440,000 tons, which was at a high level in the year. The short-term pressure of depot removal was still high. In the medium and long term, spring inspection of foreign installations was also carried out, and depot removal of ports was expected to accelerate in the future.

Demand side

With the gradual recovery of MTO profits, 69,000 tons MTO plant in Xingxing, Zhejiang Province and 200,000 tons ethylene plant in Central China started operation one after another, injecting a dose of cardiac needle into the weak downstream market. The olefin start-up rate has approached 80%, reaching a medium to high level. However, after March, due to the fall of olefin prices again, profits of MTO units in East China and MTP units in Shandong have fallen sharply, and some units have continued to suffer losses. It has been heard that Lianhong Chemical Industry in Shandong Province and Yangmei Hengtong have plans to reduce their downtime. We believe that olefin prices are expected to rebound in the later period, MTO profits will gradually be repaired, and the start-up rate is expected to return to normal again. Next week, the focus will be on the 600,000 tons MTO plant of Jiutai Phase II in Inner Mongolia. If it can be put into operation smoothly near March 20, the circulation supply of both the northwest inland and Shandong market will be further reduced, which should be a great advantage for methanol demand.

Overall, due to the unpredictable depot removal and downstream profit contraction leading to the decline in start-up, in the short term, methanol will continue to weaker recovery trend. It is expected that by the end of March, with the gradual implementation of the spring inspection of upstream devices and the launch of new MTO devices, methanol is expected to rise again, MA1905 reference interval 2500-2650.

Bulk internal reference: methanol and fuel fell simultaneously, is it a positive correlation or coincidence? The future trend of methanol also asks you to share the strategy.

Zhao Fei: I think it’s more coincidence. According to the correlation analysis, the correlation between methanol and fuel in the past month is only 0.172, which is obviously weak. The main reason is that the fuel oil itself belongs to the heavy oil after the light oil was put forward in crude oil processing. From the point of view of the industrial chain process, it is closely related to the price transmission of crude oil. From the recent trend of methanol and fuel oil, the trend of methanol is more dependent on the change of fundamentals, and the correlation between methanol and fuel oil is further reduced.