Influenced by last week’s sharp decline in U.S. oil inventories, international oil prices rose significantly in the morning of the 26th, declined in the afternoon and rose significantly at the end of the day.

On the same day, the price of light crude oil futures for August delivery on the New York Mercantile Exchange rose to $59.93 a barrel after the release of U.S. crude oil inventory data, while London Brent crude oil futures for August delivery hit a mid-day high of $66.85 a barrel.

U.S. commercial oil stocks fell by 12.8 million barrels last week, 5% higher than the average level in the past five years, according to data released by the U.S. Energy Information Agency on the 26th. The decline was much higher than the 3.1 million barrels decline in the previous week, the largest decline since September 2016.

Over the same period, vehicle gasoline stocks fell by 1 million barrels annually, distilled oil stocks by 2.4 million barrels annually, and propane and propylene stocks increased by 1.4 million barrels annually. Commercial oil stocks, including commercial crude oil, refined oil, propane and propylene, fell by 11.9 million barrels last week.

Data show that the average daily import of crude oil in the United States last week was 6.7 million barrels, a decrease of 812,000 barrels compared with the previous week. The average daily crude oil processing capacity of refineries was 17.3 million barrels, an increase of 73,000 barrels compared with the previous week. The refinery operation rate was 94.2%, higher than 93.9% in the previous week.

In addition, the average daily output of U.S. crude oil last week was 12.1 million barrels, an increase of 100,000 barrels annually, while the average daily export volume of crude oil increased to 3.77 million barrels.

According to data released late on the 25th by the American Petroleum Association, commercial crude oil fell by 7.55 million barrels last week, gasoline stocks fell by 3.17 million barrels, while distilled oil stocks increased by 160,000 barrels annually.

Phil Flynn, senior market analyst at PRICE Futures Group in the United States, said on the 26th that it seemed that the rise in U.S. oil inventories in the past few weeks had ended and that it was time for returns. The decline in crude oil inventories may be a sign of over-confidence in supply, with oil prices rebounding sharply as demand exceeded expectations in the United States and China.

According to a report released by JBC Energy Austria on the 26th, the rise in international crude oil prices on the 26th is likely due to a sharp drop of 7.5 million barrels in U.S. commercial crude oil inventories last week, according to inventory data released by the American Petroleum Association.

John Kilduff, partner of Again Capital Management, said the oil inventory report released on the 26th was one of the best reports. Domestic production was declining, demand for gasoline was strong, exports fell sharply, and refinery start-up rate increased, all of which constituted a positive factor.

In addition, PES, the largest and oldest refinery on the east coast of the United States with a daily processing capacity of 330,000 barrels, could be permanently closed, which would have an impact on the U.S. gasoline supply.

Andy Lipow, president of Lipow Petroleum Co., said that all the unused products of the United States will be exported. With the increase of domestic production, the oil products available for export will increase, and world oil demand will continue to grow. The United States will not only meet new demand, but also fill the gap created by the decline in exports of Iran and Venezuela. As PES refineries shut down, oil prices in Philadelphia and New York will rise significantly in the coming weeks until new supplies emerge, he said, and the price of a gallon of oil will rise by $0.1.

By the end of the day, light crude oil futures for August delivery on the New York Mercantile Exchange had risen $1.55 to $59.38 a barrel, or 2.68 per cent. On the same day, London Brent crude oil futures for August delivery rose $1.44 to $66.49 a barrel, an increase of 2.21%.

Oversupply remains unchanged

Under the combined effect of rising crude oil prices, easing economic and trade frictions and falling market interest rates, methanol prices began to rebound at the bottom in early June. Methanol futures rose to 2,429 yuan/ton on Friday, up 8.44% from the low on June 6. However, judging from the two trading days before this week, the 60-day average is more repressed.

Safety Inspection Causes Small and Medium-sized Enterprises to Reduce Load Production

Since the third quarter of 2018, methanol prices have been declining unilaterally, and the operating conditions of manufacturing enterprises have continued to deteriorate. At present, the profits of coal-to-methanol production enterprises are 300-400 yuan/ton, while those of natural gas-to-methanol production enterprises in Southwest China are in a loss state. In view of this, the supporting role of cost-side on methanol price began to appear, and the recent rise in methanol price was largely caused by the profit recovery of methanol production enterprises.

Recently, the start-up load of intensive overhaul units in methanol production enterprises has dropped from 71.7% to 67.4%. The decline in supply is an important reason for price rebound. However, according to the announcement, from the end of June to July, the pre-maintenance devices will be reworked one after another, involving capacity of 5 million tons per year.

However, last weekend, Shandong released the Implementation Plan of the Special Regulation Action for Safety Production in the Chemical Industry and Chemical Parks of the Province, which began to check the safety situation of chemical enterprises in the province. For those enterprises that do not comply with the safety regulations, they are required to rectify within a specified time limit, and if they fail to rectify on time, they will be shut down. This could reverse expectations of oversupply.

As we all know, Shandong is the main methanol producing area in China, and its production capacity accounts for 10% of the total national production capacity. Moreover, some methanol production enterprises in Shandong Province are small in scale, and the problems in safety inspection are prominent. The start-up load of enterprises is bound to decline, which will help to alleviate the problem of excess supply of methanol in the methanol market. However, the inspection is aimed at Shandong Province. Shandong Province has not only methanol production enterprises, but also many traditional downstream methanol enterprises. These enterprises are also small in scale, and the safety and environmental protection supporting devices are not perfect. It can be said that the safety inspection in the short term will cause the market to worry about the supply of methanol in the later period, and play a supporting role for the price of methanol, but the long-term impact is more complex.

Deposit at the port will come to an end

Since March, methanol prices have continued to decline, accelerating the process of port inventory. As of June 20, port methanol stocks stood at 1047.2 million tons, down 92.0 million tons, or 8.08%, from the beginning of March when methanol prices began to fall. Among them, the port inventory was 671,000 tons, down 192,000 tons from the beginning of March, a decline of 22.25%; the mainland (Northwest, Central China, North China, Southwest, Northeast) inventory was 376,200 tons, up 67,500 tons from the beginning of March, an increase of 21.87%.

However, at present, the import arbitrage window is open, and the market expects that the domestic arrival in July will be large, the supply pressure in East China will increase, and the process of port inventory will come to an end, which will lead to pressure on methanol prices.

At the same time, although downstream coal-to-olefin plants such as Nanjing Zhicheng are expected to put into operation, the overall demand for methanol is difficult to improve in the off-season of traditional downstream consumption, and the problem of market oversupply will not change in a short time.

Future Market Forecast

In the short term, methanol prices will continue to rise due to changes in the surrounding market climate and the impact of Shandong security inspection. However, due to the current situation of oversupply, the upstream height is limited, and short-term buying is the main operation. If the price can rebound to 2500 yuan/ton, then try short.

According to Reuters St. Petersburg, Azerbaijani Energy Minister Parviz Shakhbazov said he supported the extension of the current global oil production reduction agreement, which expires at the end of June.

Earlier, OPEC and other major oil producers agreed to reduce their total oil production by 1.2 million barrels a day between January 1 and the end of June 2019 to balance the oil market.

They will meet in Vienna from 1 to 2 July to formulate joint policies for the second half of the year.

Shakhbazov told reporters in a commentary on Monday: “I think this form, these decisions and the agreement reached at the end of last year to cut production in the first half of this year should continue.”

He added that he did not know whether other countries opposed the continuation of the agreement, which would expire at the end of this month, and that Azerbaijani was one of the non-OPEC producers that had joined the agreement.

On June 25, the PX Commodity Index was 58.40, unchanged from yesterday, down 42.97% from its peak of 102.40 points in the cycle (2013-02-28), and up 28.21% from its low of 45.55 points on February 15, 2016. (Note: Period refers to 2013-02-01 to date).

According to statistics, the domestic market price trend of p-xylene was temporarily stable on the 25th. Pengzhou Petrochemical Plant operated steadily in the field. Urumqi Petrochemical Plant started 50% of its operation. Fuhai Created Aromatic Hydrocarbon Plant started one line. CNOOC Huizhou Refinery and Chemical Plant overhauled. Hengli Petrochemical PX Plant went into operation. Other units operated steadily temporarily. Since the new plant was put into operation, the domestic market for p-xylene was normally supplied. The price trend of toluene market is stable for the time being. The opening rate of PX plant in Asia is about 80%. The closing price of PX plant in Asia is 9.5 US dollars/ton on June 24. The closing price is 816-818 US dollars/ton FOB Korea and 835-837 US dollars/ton CFR China. More than 50% of PX plant in China need to be imported. The rise of foreign price has a positive effect on domestic market price of paraxylene. The price of paraxylene in Asia is stable temporarily.

On June 24, the price of WTI crude oil in August rose to 57.90 US dollars per barrel, an increase of 0.47 US dollars. Brent crude oil in August fell to 64.86 US dollars per barrel, a decrease of 0.34 US dollars. The rising trend of crude oil price has a cost supporting effect on the price of downstream petrochemical products. The price trend of paraxylene market is temporarily stable. Recently, the textile industry has stabilized temporarily, PTA price has risen on 24 days. The average price of East China is raised near 6050-6150 yuan/ton. As of 24 days, the domestic PTA start-up rate is about 93.5%, the polyester industry start-up rate is about 90%, and the downstream production and sales rate remains high. However, PTA market price shocks, and the price of PX market is expected to remain volatile in the later period.

On June 25, the rare earth index was 402 points, down 5 points from yesterday, down 59.80% from the cyclical peak of 1000 points (2011-12-06), and up 48.34% from the lowest point of 271 on September 13, 2015. (Note: Period refers to 2011-12-01 to date).

The average price of Neodymium in rare earth metals dropped by 12.5 million yuan per ton to 457 million yuan per ton; the average price of dysprosium was 2.4 million yuan per ton; and the average price of praseodymium was 7.1 million yuan per ton. The average price of praseodymium and neodymium oxides in rare earth oxides dropped by 12.5 million yuan per ton to 355 million yuan per ton, dysprosium oxide by 2 million yuan per ton, praseodymium oxide by 4.05 million yuan per ton, and neodymium oxide by 1.25 million yuan to 3.57 million yuan per ton. The price of praseodymium and neodymium alloys in rare earth alloys dropped by 12.5 million yuan per ton to 457 million yuan per ton, while the average price of dysprosium-iron alloys was 2 million yuan per ton.

Recently, some prices in the rare earth market have fallen, the domestic rare earth market is in general, and most commodity prices in the rare earth market are stable. However, the prices of some products in the rare earth market have fallen sharply and the prices of terbium-based metals have fallen sharply. Recently, the prices of Praseodymium-Neodymium series products have fallen back, the supply in the market is normal, and the prices of light rare earths have declined recently. The price fluctuation of rare earth market is related to environmental protection supervision in the whole country. Rare earth production has its particularity, especially the radiation hazard of some products, which makes environmental protection supervision stricter. Under the strict environmental protection inspection, rare earth separation enterprises in many provinces have stopped production, resulting in a general market of rare earth oxides. Recently, the rare earth market has turned to the seller’s market. The manufacturers have reasonable control over sales and are reluctant to sell. Especially for some mainstream rare earth oxides, the supply performance is still tense. The price trend of rare earth market has slightly declined. Recently, large enterprise groups are reluctant to sell, and the market of rare earth has improved. However, the major manufacturers are cautious about the pricing of products.

Recently, the State Environmental Protection Department has made no reduction in its stringent efforts, which has a greater impact on the rare earth industry. The rare earth industry has a low start-up and a cold market. Recently, the NDRC held a press conference on macroeconomic operation. Meng Wei, a spokesman for the NDRC, answered reporters’questions on rare earth. He said that on the basis of in-depth investigation and scientific demonstration, relevant policies and measures would be put forward to give full play to the special value of rare earth as a strategic resource. Due to the increasingly obvious regulatory effect, the rare earth industry upstream. The supply of raw ore resources has shrunk, and the trading market of rare earth industry is normal.

Rare earth analysts of business associations expect that the recent stringent domestic environmental protection efforts will not decrease, coupled with the domestic reorganization of the order of the rare earth industry, Myanmar’s restrictions on exports and reduced supply, which will provide some favorable support for the rare earth industry, but the recent rare earth market transactions are limited, and rare earth products are expected to remain volatile.

Last week, the rapid development of the futures market gave petrochemical manufacturers a certain cost support. New maintenance devices have also been opened one after another, which has a certain mitigation effect on supply. In inventory, after a rise in the market, inventory has been effectively digested, and merchants actively shipped, but terminal demand has not improved, or market growth is difficult to have greater expectations.

I. Several Reasons Causing Poor Transaction in Spot Market

1. Supply exceeds demand, and new products are put into the market one after another, which intensifies the rising process of stock backlog in the market.

2. It is difficult for downstream orders to break expectations and market supply to be digested effectively, which aggravates market bullishness.

3. At present, the stock of “two barrels of oil” is still at a high level, and the pressure of market sales is not decreasing.

4. There are not many overhaul devices, and the phenomenon of low-price goods rejection is frequent in the market, mostly low-level transactions.

II. Frequent Inventory Pressure

The high stock of “two barrels of oil” causes the pressure of price reduction of production enterprises to increase gradually. At present, the only way to alleviate the pressure of market inventory is to increase the order quantity of downstream enterprises, or to reduce the production load of manufacturers, or to advance to the maintenance stage, so as to alleviate the pressure of market supply and demand.

3. Prospects for the Future Market of Polypropylene

At present, the cost support of polypropylene has increased due to the increase of most of the previous price of oil and gas, but the follow-up of spot delivery is insufficient. Considering that the price rebound of polypropylene is greatly affected by the macro-level, and the supply and demand side is limited, at the same time, the import window of polypropylene is close to open, the price gap between drawing and copolymerization is gradually close, and there are still plans to put into operation for giant positive sources and other devices in the future. It is expected that the price of PP market will increase slightly in the near future. The main stream of wire drawing is 8500-8700 yuan/ton, and the main stream of copolymerization is 8800-9000 yuan/ton.

1. Commodity Name: Magnesium Ingot (9990)

2. Latest price (2019.6.24): 15900 yuan/ton (lower mainstream quotation)

The ex-factory tax in Fugu area is 15500-15800 yuan/ton; the spot remittance in Taiyuan area is 15700-16000 yuan/ton; the spot remittance in Wenxi area is 15700-16000 yuan/ton; and the spot remittance in Ningxia area is 15600-15700 yuan/ton.

3. The main points of analysis are as follows: at present, the market of magnesium is on the low side, the downstream demand is not enough, the processing enterprises purchase more on demand, the traders enter and exit more quickly, and the willingness to hoard goods is low. At present, the stock of magnesium ingots has increased, and the supply of low-price products has begun to increase sharply. The market mentality of “selling up but not buying down” intensifies the weak operation of the market in the off-season of weak demand at home and abroad.

4. Future market forecast: weak demand, high inventory, magnesium ingot short-term weak operation is expected to be the main.

Price Trend

Market consolidation of maleic anhydride this week (6.17-6.21)

According to data from business associations, the average price of maleic anhydride offer by the end of the weekend was 6550.00 yuan/ton (including taxes), and the offer was weak.

II. Market Analysis

Product: This week, the domestic maleic anhydride market as a whole continued to decline.

Industry chain: First of all, unsaturated resin continued to operate weakly this week. Resin factories mainly purchased on demand, and domestic maleic anhydride market weakened. Secondly, mainstream factories continued to offer excessive prices, and the current market supply exceeds demand. The fluctuation of crude oil in the periphery affects the market mentality, and the rise of Crude Oil supports the market to a certain extent. The rise of oil price leads to the rise of pure benzene price in the upstream raw material, while the price of n-butane is still hovering at a low price, the market supply is sufficient, and the downstream is still in the off-season. In the short run, the profit margins of maleic anhydride by benzene and butane methods remain stable. Finally, at present, downstream warehouse replenishment is cautious, and factories are mainly on the lookout.

3. Future Market Forecast

At present, domestic maleic anhydride market may stop falling and stabilize in the near future, with prices rising slightly, according to analysts of maleic anhydride products of Business Society Chemical Branch.

Commodity Index: On June 21, the polyaluminium chloride commodity index was 104.50, which was the same as yesterday. It was 3.34% lower than the peak of 108.11 points in the cycle (2019-04-24), and 3.57% higher than the low of 100.90 points on April 09, 2019. (Note: Period refers to 2019-04-01 to date)

Latest price (June 21): Polyaluminium chloride (solid, content (> 28%) quoted 1933.33 yuan/ton.

Main points of analysis: On June 1, the mainstream quotation of domestic polyaluminium chloride market was about 1950 yuan/ton, and on June 21, the market price of the product did not change much. The mainstream quotation was reported to 1933.33 yuan/ton, with a fluctuation of less than one point. According to the monitoring data of the commercial association (100ppi.com), the current domestic market quotation range of polyaluminium chloride is about 1800-1900 yuan/ton for solid polyaluminium chloride (industrial grade, content (> 28%) and 330-410 yuan/ton for liquid (industrial grade, content 10-12%).

Industry chain: Prices of upstream hydrochloric acid and other products of polyaluminium chloride have not changed much in recent years; downstream demand is basically stable, and the overall price of polyaluminium chloride has fluctuated slightly in recent years.

Future market forecast: In the short term, if there is no big fluctuation in the price of raw materials in the upstream, the demand in the downstream is relatively stable, and the market price of domestic polyaluminium chloride is basically stable.

Price Trend

According to the price monitoring of business associations, the market of potassium sulphate has been stable this week, and the price of potassium sulphate in northern China has increased due to insufficient supply.

II. Market Analysis

At present, the arrival price of 50% water and salt powder in Qinghai is more than 2550 yuan per ton. Mannheim’s quotation remains relatively high, and 52% water-soluble shipment is still the main one. The ex-factory price is more than 3000 yuan/ton, but the 50% content of potassium sulfate is almost unavailable. Southern tobacco bidding will begin one after another. Three tendering plans have been announced. Fujian tobacco bidding is 33.553 million tons of potassium sulfate, Liangshan Golden Leaf bidding is 14.5 million tons of potassium sulfate, Sichuan Golden Leaf bidding is 11,000 tons of Mannheim potassium sulfate. The total bidding volume reaches 59,000 tons of potassium sulfate. The total amount of potassium sulfate has increased compared with last year, or will form a favorable support for the potassium sulfate market. The price of Mannheim potassium sulfate is basically stable. The mainstream factory price of 50% of the powder is 2800-3100 yuan/ton, and the factory price of 52% of the powder is 3000-3200 yuan/ton. The price in South China is relatively high. The arrival price of 52% Luo Potassium powder is 2680-2700 yuan/ton, and the water and salt 50 powder Market in Northwest China is 2550-2600 yuan/ton.

3. Future Market Forecast

Potassium sulfate analysts at the business association believe that the market of potassium sulfate will stabilize mainly in the short term.