Price Trend

According to the price monitoring of business associations, as of July 3, the average price of domestic aggregated MDI market was 12 425 yuan/ton, and the overall market was not hot.

II. Market Analysis

Products: Domestic aggregate MDI market climate is not warm, continue to range fluctuations. Supplier manufacturers’supply is tightening, agent’s supply is not much, quotation is more stable, follow the market, but downstream picking mood is not positive, just need small orders. Influenced by recent environmental inspections, 141b began to rise, which would inhibit the demand for aggregated MDI. The market continues to be weak and deadlocked, and the prices of the holders dare not rise or fall, which is more painful, and the middlemen in the northern market are relatively calm in the near future.

On the market side, South China has consolidated the weak market segments of MDI. The market in North China and Shandong is in a downward trend. The markets in East and South China are weak and stable. The shipment of goods is mainly accompanied by the shipment of goods by the holders, and the negotiation of the actual orders is weak. East China aggregates weak shocks in the MDI market. The downstream demand follow-up is weak, the main shipment is accompanied by the holder, the inquiries are scarce, and the confidence of the operators in the future market is insufficient. The aggregated MDI market in North China continued to decline narrowly. Despite the tightening of the overall supply side of the supplier, the market demand follow-up has been weak, coupled with environmental inspection to curb the northern hard bubble market, it is expected that the short-term market is mainly weak.

Industry chain: raw materials, pure benzene: driven by the strong East China pure benzene, and the rising prices of some downstream products in Shandong Province, the refined pure benzene is running steadily, and the low-price supply in the market is difficult to find. Shandong mainstream in 4750-4950 yuan/ton, individual refinery due to parking overhaul, no inventory. Local hydrobenzene rose to 4850-4950 yuan/ton. Aniline: Although the raw material pure benzene rises sharply and the cost of aniline is under pressure, due to the high pressure of shipment, aniline enterprises operate cautiously and the price is stable. Shandong mainstream negotiation price reference at 5850-6070 yuan/ton. East China market mainstream reference 6000-6100 yuan/ton acceptance.

3. Future Market Forecast

Business Cooperative Perspective: Business Cooperative Aggregate MDI analysts predict that short-term domestic aggregate MDI market prices continue to be weak and deadlocked, and it is not easy to rise or fall.

Price Trend

In June 2019, the domestic methanol market was mainly volatile. According to the price monitoring of business associations, the average domestic methanol price was 2334 yuan/ton at the beginning of the month, and 2180 yuan/ton at the end of the month. The price dropped by 6.60% in the month, 19.93% compared with the same period last year.

II. Market Analysis

Products: The domestic methanol market trend in June is mainly shocky. With the end of spring maintenance, local methanol supply increased, while import arrivals maintained a high level. Traditionally, demand was weak, and the second half of the methanol spot market was deadlocked, mostly weakened. The new 600,000-ton methanol-to-olefin plant in Jiutai, Inner Mongolia, was put into operation this month. At present, the methanol purchasing volume is stable with full-load production. The olefin plants expected to be put into operation from July to August are Shandong Luxi, Nanjing Chengzhi and Zhongan United.

Industry chain: formaldehyde: formaldehyde Market as a whole fell this month. The upstream methanol market is lower as a whole, and the cost is difficult to support. However, the downstream market is affected by the busy farming in the north, the flood season in the South and the environmental protection policies in some areas. The overall start of the market is not high, and the demand is difficult to support the formaldehyde market. As a result, the formaldehyde market is running lower this month, the profits of enterprises are reduced, and the market as a whole. Volume declined. Dimethyl ether: Dimethyl ether market overall shocks slightly fell this month, price fluctuations in the range of 20-100 yuan/ton. During the month, the main enterprises in Henan such as Yima and Xinlianxin all maintained half-load operation. The total daily output in this area decreased by 40% to about 3300 tons (with a full output of 5500 tons). Later in the month, the Tangshan Xuyang and Shanxi orchid dimethyl ether plants were shut down again for overhaul. The supply in the northern market was further narrowed, and the manufacturers supported by low supply were obviously weak. In order to maintain the daily balance of production and marketing, only a small price adjustment was made under the current situation, while the mainstream transactions in the northern market fluctuated between 3000-3200 yuan/ton. Acetic acid: This month, the domestic acetic acid market rose and fell, with frequent market shocks. At the beginning of this month, the main acetic acid plant in East China stopped unexpectedly and for a long time, which led to the shortage of supply in East China, passively transferring supplies from North China, and gave the enterprises the initiative to report an increase, with the market rising by 400 yuan/ton. In the mid-month period, the mainstream production enterprises in East China resumed normal operation, and downstream demand continued to weaken. The conflict with high-price acetic acid was obvious, the market supply was not digested smoothly and the domestic supply gradually accumulated. After that, the enterprises in Central China and Shandong pulled back their offers one after another, driving down the market transaction price by about 250 yuan/ton. Towards the end of the month, the short-term failure of the main production enterprises in East China has given the market part a bullish mentality, but the device has been restored in time, breaking the market bullish enthusiasm, and returning to stability after the acetic acid market rose slightly.

Industry: According to the price monitoring of business associations, in June 2019, there were four kinds of commodities rising annually in the energy sector, one of which rose more than 5%, accounting for 6.3% of the monitored commodities in the sector; the top three commodities were WTI crude oil (5.02%), MTBE (2.46%) and coking coal (0.82%). There are 12 kinds of commodities with a decline of more than 5%, accounting for 31.3% of the monitored commodities in the plate. The products with the first three declines are petroleum coke (-8.44%), liquefied natural gas (-7.64%) and naphtha (-7.09%). This month’s average rise and fall was -3.07%.

3. Future Market Forecast

Business Society Viewpoint: On the positive side, due to the impact of the Iranian collision, the cost of shipping from Iran to China has increased, and it is expected that Iranian cargo will remain tense in July; there are still some scheduled overhauls of methanol plants in July, including Shenmu, Yankuangyulin, Xianyang Chemicals and other enterprises; and the MTO plant in Jiutai, Inner Mongolia, has been upgraded to 90% by the end of September. The second MTO of Shandong Luxi and Nanjing Chengzhi is expected to start production from July to August. On the negative side, in traditional downstream products, the market of dimethyl ether and acetic acid continued to decline, and the profit of enterprises was not good; the import volume in June was estimated to be more than 800,000 tons; however, the import volume in July will decline due to the increase of international equipment maintenance and the restriction of Iranian transportation; the safety and environmental protection inspection will continue to be rigorous, and local market terminal enterprises. Production reduction or shutdown are affected, which is not conducive to methanol consumption. Methanol analysts in business associations predict that the main logic of the recent spot market is that the supply of methanol exceeds demand, and the short-term market of methanol is mainly declining; if Nanjing Chengzhi goes into operation smoothly, methanol is expected to stop falling in late July.

Major oil producers said they were optimistic that the cut-off agreement would be extended, with crude oil futures closing higher in June.

West Texas Light Crude Oil (WTI) futures for August delivery on the New York Mercantile Exchange rose $0.62 to close at $59.09 a barrel, up 1.1%, hitting a high of $60.28 a barrel. According to data from the Dow Jones Market Data Group, WTI futures prices rose 9.3% in June trading on spot contracts.

Meanwhile, Brent crude oil futures for August delivery on the London ICE European Futures Exchange rose $0.32 to close at $65.06 a barrel, up 0.5%, hitting a high of $66.75 a barrel. Brent’s oil price rose 3.2% in June trading on spot contracts.

According to foreign media reports, Saudi Arabia’s energy minister Khalid al-Falih said that most OPEC member countries would like to extend the cut agreement for nine months. Earlier in the day, Bijan Zanganeh, Iran’s oil minister, said in an interview that he would support a nine-month extension of the cut.

Earlier, Russian President Vladimir Putin announced last weekend that Russia had reached an agreement with Saudi Arabia to extend the cut for six to nine months. Putin met with Saudi Crown Prince Mohammed Bin Salman at the G20 summit in Japan and said: “We will support an extension of the cut-off agreement, as will Russia and Saudi Arabia.” He added: “As far as the extension is concerned, we have not yet decided whether to extend it for six months or nine months, maybe nine months. “

Suhail al-Mazrouei, the Minister of energy and industry of the United Arab Emirates, also said in an interview that it might be necessary to extend an agreement reached in December last year to reduce production by 1.2 million barrels a day, which expired last Sunday.

Marshall Steeves, an energy market analyst at Informa Economics, told MarketWatch, the US financial media, that after Putin’s meeting with Saudi Crown Prince Mohammed Ben Salman, the extension of the cut-off agreement for six to nine months seems to be in place. “Of course, this requires the overall approval of the organization, but with Iran and other countries agreeing to cut production, this decision seems likely to be adopted. However, the OPEC + decision still needs to be considered, because the only question now is whether Russia will agree. He said.

OPEC Member States and non-OPEC oil-producing countries such as Russia are gathering in Vienna to renegotiate production reduction agreements, which will hold ministerial meetings on Tuesday.

Earlier this month, Iran shot down an American surveillance drone over the Strait of Hormuz. Some analysts believe that this situation may lead to the disruption of crude oil flow and transportation in the region and increase tensions between the United States and Iran. Since 2017, OPEC and its allies have been cutting crude oil production to prevent oil prices from falling amid soaring U.S. production. This year, the United States has surpassed Russia and Saudi Arabia as the world’s largest crude oil producer.

Oilfield service provider Baker Hughes reported earlier on Friday that the number of active crude oil drilling platforms in the United States increased by four this week to 793, up from one last week. The data from Beckhughes can provide clues to future U.S. crude oil production. The increase in the number of drilling platforms means that production may rise, which is usually a negative factor for oil prices.

In other energy trades on the New York Mercantile Exchange, the price of RBOB gasoline futures for July delivery rose 1.8% to $1.931 a gallon, up 7.8% in June, heating oil futures for July delivery rose 0.7% to $1.954 a gallon and 5.6% in June. Gas futures prices fell 4.1 cents to $2.267 per million UK heat units, a 1.8% drop, and fell by about 6% in June.

OPEC and its allies will continue to cut oil supplies at the same level in the first quarter of 2020, according to Prussian Energy Information. The actual leaders of the producer alliance, Khalid al-falih, Saudi energy minister, and Alexander Novak, Russia, have agreed to extend the oil cuts for longer than previously announced.

OPEC and non-OPEC cuts of 1.2 million barrels per day expire on Sunday. Oil demand growth forecasts and U.S. production surge, and many ministers support an extension to prevent further price falls. The alliance will meet in Vienna on Monday and Tuesday to decide how to proceed.

Arriving in Austria’s capital, Falkh said that the oil cuts are most likely to be extended by nine months, but the specific time will be for talks with other ministers. In addition, he said that the number of cuts should remain unchanged and there was no need for further cuts, as some countries, such as Algeria and Iraq, had suggested. Despite the slowdown in demand growth, demand for more than 1 million barrels a day is healthy and the market will remain balanced in six to nine months.

Nowak said it was difficult to increase production because of bad weather conditions in Russia. The most likely and beneficial way for the season to affect demand is to extend trading for nine months. In addition, the removal of contaminated Russian crude oil from the Druzhiba pipeline may also enter autumn, affecting production.

Much of the discussion around the agreement revolves around the extension before the end of the year. Russian President Vladimir Putin met with Saudi Crown Prince Mohammed Bin Salman at the G20 summit in Japan on Saturday, and announced that the two countries had agreed on expanding cuts. After that, he proposed for the first time the possibility of a nine-month agreement.

On June 22, the World Energy Blue Book: World Energy Development Report (2019), published by the International Energy Security Research Center of Graduate School of Chinese Academy of Social Sciences and Social Science Literature Publishing House, was released in Beijing.

I. Blue Paper’s social influence is becoming more and more prominent.

Blue Paper is divided into four parts: general report, market article, hot topic article and frontier discussion. The general report and the market report comprehensively reviewed the operation of the global energy market (oil, natural gas, coal, electricity and so on) in 2018, and prospected in 2019. The hot topics included the introduction and operation of China’s crude oil futures, geopolitical risks and China’s energy security, “one belt and one road” energy cooperation and policy recommendations, and The current situation and problems of the production, supply and marketing system of natural gas market, the policy of “coal to gas” and other hot issues are analyzed, while the frontier discussion section conducts in-depth research on the frontier topics of energy industry, such as research and development of energy storage technology and application, hydrogen fuel development, etc. We believe that the Blue Paper focuses on the global energy market and conducts in-depth analysis and Research on hot issues and cutting-edge topics. It has a high vision and a deep content. It has been published for seven consecutive years since 2013, and has had a wide and profound impact on the energy industry and academia.

2. China has become the third largest crude oil futures market in the world

The Blue Book points out that since the birth of the Shanghai Futures Exchange’s “Renminbi Crude Oil Futures” in March 2018, trading volume has risen rapidly. At present, China has become the largest crude oil futures trading market in Asia and the third largest in the world, second only to the WTI crude oil market in the United States and the Brent crude oil market in the United Kingdom, and its international influence has gradually emerged.

We believe that with the expansion of China’s crude oil supply and demand gap in recent years and the high degree of external dependence year by year, the trend of crude oil prices has brought greater challenges to the smooth operation of China’s petroleum and chemical industries; the launch and smooth operation of China’s crude oil futures market not only provides a multi-level for China’s relevant enterprises. It also promotes the internationalization of RMB and provides a guarantee for the healthy and stable operation of China’s petroleum and chemical industries.

3. China’s Natural Gas Demand Continues to Grow Highly

The Blue Book points out that China’s natural gas consumption continues to grow rapidly, driven by policies such as “coal to gas” and “winning the battle to defend the blue sky”. The proportion of natural gas in primary energy in China has also increased steadily from 5% in the early period of the 12th Five-Year Plan to 7.5% in 2018. In the next 10 years, the proportion of natural gas in primary energy in China will increase from 7.5% in 2018. 5% rose to about 15%.

We believe that natural gas, as a clean energy, will continue to maintain a rapid growth momentum under the background of the transformation and upgrading of China’s energy consumption structure. Driven by the gradual increase of urbanization rate, the gradual improvement of natural gas pipeline network layout and environmental governance, China’s natural gas demand will still be in the golden period of development, with huge potential for future development and incremental space. According to the forecast data of PetroChina Institute of Economics and Research, China’s natural gas demand will reach 620 billion square meters in 2035, of which 300 billion square meters are produced by itself, about 52% need to rely on imports.

III. Investment Suggestions

Sinopec, the leading domestic petroleum processing enterprise, will continue to be optimistic, as well as the wide range of energy sources focusing on natural gas business.

Risk cues. Oil price volatility risk, main product price decline risk, revenue less than expected risk, etc.

After a sharp decline in May, the domestic PVC market gradually stabilized and rebounded in June. Seasonal trend shows that there will be seasonal upward trend from the end of June to the middle of August in recent years. Under the background of increased peripheral pressure in 2019, can we get out of the seasonal upward trend again?

1. Supply keeps a low growth rate and supply pressure is relatively limited.

Since 2019, production capacity has been put into operation, including Shaanxi Beiyuan, Shanxi Ruiheng, Ningxia Jinyuyuan, Taizhou, a total of 700,000 tons, and there are still 740,000 tons of plant planned to be put into operation in the later period.

In terms of output data, the cumulative output in January-May 2019 was 790.307 million tons, an increase of 1.28% over the same period last year. Due to the high amount of spring overhaul in the year, the loss of spring overhaul (April-July) increased by about 200,000 tons compared with 2018. For the whole year, if the level of monthly maintenance in the later period is roughly the same as that in 2018, the growth rate of supply in the whole year will be about 3%.

From the point of view of overall supply and demand, although the demand performance is not good, the expected demand still maintains a year-on-year growth trend. The probability of tight balance between supply and demand throughout the year is higher. Serious imbalance between supply and demand is not expected. The price fluctuation range is expected to be the same as in 2018. The seasonal peak seasonal rise in 2018 started at the end of June and reached around 7500 in early August. The expected seasonal rise still exists in the year, but the rising space is expected to be lower than that in the third quarter of 2018.

2. Stop the Spot Drop and Stay Steady, Transaction Volume

From the perspective of PVC basis difference, the base difference has changed from strong to weak since mid-June, and futures are almost flat. After the end of the overhaul in July, construction starts to pick up, the pressure on the spot supply will increase, and futures may weaken in the latter period due to the expectation of the peak season.

3. The peripheral situation eased and market confidence resumed.

Influenced by the good news from Sino-US trade, the trend of commodities stopped falling and rebounded, the market was expected to restore, and the impact of PVC also rebounded. At the same time, considering the seasonal trend, the current time node has the expectation of gradually building the bottom. If the macro-level is stable in the later period, then in chemical products, because of the balance of supply and demand, it can be used as a multi-head configuration in chemical products.

4. Housing start-up data performed well and expectations remained in peak season.

From January to April, the new housing construction area was 58.552 million square meters, up 13.1%, and the growth rate increased by 1.2 percentage points. Among them, new residential construction area of 433.35 million square meters, an increase of 13.8%.

From the perspective of real estate data, the demand for PVC in September is still supported by the start of real estate construction from January to April, but the support for the 2001 contract is relatively limited.

5. Summary

From the perspective of the supply and demand pattern of PVC, the supply side in the first half of the year hedged the supply increment brought about by the putting into operation of some production capacity because of the much higher spring overhaul volume than the same period in previous years. It is estimated that the supply growth rate will be 1.58% in January-June and 3.3% in the whole year. On the demand side, the growth rate of demand is expected to be weaker than that of the past two years, but the growth trend is maintained. Supply and demand are expected to maintain a tight balance throughout the year. Prices are expected to rebound in the peak season of the third quarter, but it is difficult to break through the 2018 high in the year. The 09 contract can try to do more at the low. Long-term fundamentals, demand-side as a result of the downward trend of real estate is difficult to change, in the late sales end to start, will play a restraining role in the long-term demand, the 2001 contract can be empty run.

With the end of summer fertilizer, domestic fertilizer market has entered the off-season, and there is still a period of time before autumn fertilizer, and the turnover of domestic fertilizer market has slowed down. Industry insiders expect that after July, manufacturers will introduce preferential policies, autumn fertilizer will be opened, and compound fertilizer manufacturers will also start autumn fertilizer production.

Analysis I

Urea market is temporarily stable

According to the reporter, the harvest of wheat in the north is over, the planting of maize is near the end, the fertilizer of maize is over, the new demand has not yet formed, and the fertilizer market is in the period of consolidation. In view of the special stage of agricultural production, the market has limited pull on the fertilizer market, and the price of urea products is stable. At present, the mainstream factory quotation of small particles in North China is 1910-1920 yuan/ton, and that of large particles is 1910 yuan/ton, which is expected to be difficult to adjust dramatically in the short term.

According to Han Haixia, general manager of Henan Xinye Haifeng Agricultural Science and Technology Co., Ltd., the fertilizer market has ended in summer. Next, the northern crop areas will enter the off-season of fertilizer use. Only vegetables, melons and fruits and other crops have a small demand for fertilizer. She said: “At present, the main concern is the autumn fertilizer market, manufacturers have held orders, manufacturers mostly in the form of interest-bearing to let distributors pay. The manufacturers are worried about the pressure of centralized shipment in September, and have started to move goods from sporadic to sporadic. According to past practice, in July, with the autumn fertilizer being put into production, the price of raw materials such as nitrogen, phosphorus and potassium may be increased, but the increase should not be too large.

According to Huang Hua, the business manager of Sirte Fertilizer Industry in Anhui Province, the market as a whole is in a wait-and-see stage, and the purchasing volume of urea, diammonium and compound fertilizer by distributors is extremely limited.

It is also understood that India’s MMTC company issued urea quota tender information, opening on July 1 and closing on July 8. This news has a certain boost to the confidence of domestic urea market, the market mentality has improved, Urea Export is expected to ease the inventory pressure of enterprises.

Analysis II

Phosphate Fertilizer Market Trading Light

At present, the phosphate fertilizer market is in a gap period of demand. At present, there is no demand for Northern agriculture. Some distributors begin to prepare fertilizer in autumn. However, most distributors hold a wait-and-see attitude, with few new orders and few transactions. Some manufacturers have lowered their prices, but the market is still dominated by acquisition-and-purchase mode. On the export market, international traders are not active in purchasing, and the FOB price of domestic diammonium exports continues to fall. Ammonium market is also weak, 55% of ammonium powder factory quotation in 2000-2200 yuan/ton, general goods, enterprises digest pre-order, it is expected that the short-term price without demand support is insufficient upward momentum.

According to the data of 23 provinces monitored, the wholesale price of domestic diammonium phosphate remained stable on the whole. Among them, the price of Tianjin shows a rising trend, rising by 100 yuan/ton; the prices of Henan, Hubei and Xinjiang show a declining trend, falling by 15-37.5 yuan/ton, Henan Province has a large decline, while the prices of other provinces remain stable. The retail price of domestic diammonium phosphate remained stable. Among them, prices in Henan, Hubei, Sichuan and Xinjiang all showed a downward trend, falling by 23.9-83.4 yuan/ton, while prices in other provinces remained stable.

It is also reported that in the export market, although there are outflows of procurement tenders in the Indian Peninsula and Bangladesh markets, the buyer’s intention to bid is weak due to the downward price of the international market, the buyer and seller are still in a stalemate, and the domestic export price of diammonium is US$340/ton FOB.

As the domestic and international markets are in a downward trend, it is expected that there will be no turning point in the phosphate fertilizer market in the short term.

Analysis III

Compound fertilizer is valuable but not marketable

This summer fertilizer performance is still acceptable, grass-roots sales are relatively smooth. According to Han Haixia, 45% sulfur-based compound fertilizer and 45% chlorine-based compound fertilizer are sold at 2500 yuan/ton and 2100 yuan/ton in Henan market. She said that the local planting structure changed greatly this year. Many corn growers changed to grow peanuts, soybeans, sorghum and other crops, resulting in a sharp reduction in the area of corn planted this summer. Overall, however, the fertilizer market sales this summer were basically flat compared with previous years.

In addition, she said that in recent years, farmers have also changed their fertilizer use structure. Among them, the sales of special fertilizer are increasing year by year. Firstly, cash crop growers use special fertilizer to cover a large area. At the same time, some field crop growers have gradually attached importance to soil structure adjustment and began to apply special fertilizer.

With the end of the fertilizer season in summer, the market demand for compound fertilizers is weak, and the price of compound fertilizers is in a state of no market. It is understood that the current 45% potassium sulfate compound fertilizer factory price is as low as 2180 yuan/ton. In view of the weak market demand, the compound fertilizer manufacturer began to take turns to repair the production line, and the production start-up rate was low.

Huang Hua said: “Although dealers are watching, in fact, the enterprise’s plan is in an orderly way. Starting from mid-June, manufacturers began to organize various meetings for the autumn fertilizer market, but at present only some distributors pay money, and delivery has not yet been carried out.

Huang Hua believes that according to past years’experience, the autumn fertilizer reserve will start in mid-July, but this year there will be less rain in Shandong, and it is difficult for some areas to plant fertilizer at the same time. It is expected that there will be a wave of demand for fertilizer in the later period. He said: “The specific future market depends on the policies of the manufacturers. Generally speaking, the price is relatively moderate, not too high or too low. The specific policies of the manufacturer on compound fertilizer will be announced in July, and the market will be clearer then.

To sum up, Feicheng City recently recess period, in addition to cash crop areas, grass-roots sales are light. There is still a period of time before autumn fertilizer, and distributors are waiting for manufacturers to introduce preferential policies. Later, the domestic fertilizer market will not have too much turbulence, the focus of the fertilizer market will focus on the export market.

Recently, as a buyer’s representative, Li Yalan, chairman of Beijing Gas Group, said at the G20 Natural Gas Day in Tokyo, Japan, that the long-term existence of LNG Asian premium would seriously limit the sustainable development of Asian natural gas market. “At present, the global natural gas market resources have entered a period of oversupply. With the increase of the number of sellers, the market competition becomes more intense.

It is understood that the “Asian premium” of natural gas refers to the lack of pricing power, which results in higher prices of natural gas (mainly LNG) traded in Asian markets than those in North America and Europe. Asian countries, especially those in Northeast Asia such as China, Japan and Korea, are forced to pay higher import costs of natural gas for a long time.

Data show that in 2018, the average annual spot price of LNG in Henry Hub and NBP is US$3.16 and US$8.05 per million British heat units respectively, while the average import price of LNG in Northeast Asia is US$9.41, and the market price ratio of US, Europe and Asia is 1:2.5:3. Thus, compared with the North American and European markets, LNG prices in Asian markets are generally higher.

LNG exporters increased from 12 in 2000 to 21 in 2018, Li Yalan said. Asian market leading buyers have changed from traditional buyers such as Japan and South Korea to emerging market countries such as China and India, which have large volume, great potential for development and diversified natural gas supply channels.

She further said that Asia was the main growth engine in the global gas market. In 2018, Asia accounted for 20% of global natural gas consumption and 32% of global natural gas consumption growth. Global LNG trade growth mainly comes from Asia. By 2030, Asian consumption will account for 24% of global total, and 60% of global LNG demand growth will come from Asia.

The Natural Gas Market Report 2019 released recently by the International Energy Agency (IEA) points out that global demand for natural gas will continue to grow in the next five years, with the significant increase in gas consumption in Asian economies and the gradual improvement of the international natural gas trading system. In 2018, global natural gas demand grew by 4.6% year-on-year, the highest growth rate since 2010. Global natural gas consumption accounts for about half of primary energy growth. Over the next five years, the global demand for natural gas will grow by more than 10% annually, and the annual consumption of natural gas will exceed 4.3 trillion cubic meters by 2024.

“The time is ripe to eliminate the Asian premium.” Li Yalan suggested that first, China, Japan and South Korea should strengthen cooperation to study and analyze the causes of high premiums and avoid premiums in new contracts; secondly, the buyer should have full trust so that the seller can fully understand, evaluate and adjust the current market environment; thirdly, the seller should take the initiative to reduce costs and share low-cost Dividends with the buyer; fourthly, eliminate “non-negotiable payment, destination and resale”. Limit”and increase the price review mechanism to help buyers reduce risks and achieve win-win situation.

It is reported that the G20 Natural Gas Day is a special meeting on natural gas under the framework of the G20, aiming to provide a dialogue platform for leaders of international organizations, industry leaders and policy makers on the development of the natural gas industry, and to provide ministers of energy of the G20 with the latest trends, market views and professional suggestions on the development of the natural gas industry.

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.