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.