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.