Methanol keeps a good fortune, but its price is falling.

Since April, the domestic methanol market has performed well as the spring inspection of the plant has been carried out, the coastal inventory has gradually declined, the inland price has been firm, but the port and futures prices have declined. The feeling is that the price of the port has fallen while keeping a lot of good data. Especially now the atmosphere of short-selling in the whole market is very strong, there is a lot of methanol falling unremittingly. So, which link is the problem, or the methanol market has been “demonized”!


Data are getting better

Since April, the domestic methanol data have been significantly improved. Among them, the start-up rate of domestic methanol plant decreased from about 73% in the previous period to about 65% in this week, and the spring inspection of large-scale plants was carried out on schedule. Prices in Northwest China have remained near 2200 yuan/ton for several weeks, with a discount of 2800 yuan/ton. Inventory in Northwest China has also been gradually reduced from 260,000 tons to less than 200,000 tons, which also includes 50,000-60,000 tons of raw materials in Jiutai’s new olefin plant.

Looking from the coastal areas, the total inventory of East and South China has dropped from about 1.1 million tons in the previous period to about 930,000 tons at present. Among them, the saleable inventory of East China has dropped from about 200,000 tons in the earlier period to about 130,000 tons at present, and has restored to a reasonable level. It is not easy to obtain such data under the condition that the short-term consumption of downstream is reduced due to the explosion accident of sound water in Jiangsu area.

Careful calculation shows that in the first quarter of this year, under the background of high start-up rate of domestic methanol plants and high inventory of products, the overall inventory can still be reduced. Demand has increased by more than 8% compared with the same period last year, indicating that downstream demand is very good.

Prices in coastal areas are falling

In April, the price of methanol in the port area gradually weakened, and it has become a “depression” of domestic methanol price. As of April 16, methanol quotation in Jiangsu was 2 380 yuan/ton, down 100 yuan/ton from 2 480 yuan/ton at the beginning of this month, a decline of 4%. Futures MA1909 contract closed at 2 471 yuan/ton, down 37 yuan/ton from 2 588 yuan/ton at the beginning of this month, a decline of 1.4%. Compared with other areas in China, the price of coastal ports is on the low side. Apart from 2200 yuan/ton quoted price converted to 2800 yuan/ton in Northwest China, 2250 yuan/ton quoted price converted to 2610 yuan/ton in Hebei, 2320 yuan/ton quoted to 2520 yuan/ton in Shandong and 2250 yuan/ton quoted to 2450 yuan/ton in Henan.

Up to now, the arbitrage window in East China and other regions in China has been closed. The arbitrage window in Northwest China has been closed with East China for as long as a month, and the South-North Jiangsu region once quoted the level water with East China.

Keeping a bunch of good things but falling

At present, the market for methanol interpretation of the current and future voices are many, but it is undeniable that a bunch of good data, prices have declined. Looking at the current interpretation of the methanol market, some voices are likely to be “extreme”. For example, some people think that the large-scale maintenance in Northwest China is “hypocritical”. I can’t understand how people repair, and then I return to the inspection. Others believe that the rapid depot of ports at present is “unexpected and unsustainable”, which is not a big problem. If it is good to land, it may be better.

The expectation for the future market is that maintenance devices will be centrally opened, imports will enter in large quantities, and inventories will reach a new high. Neglected expectations are that demand will also be released centrally, supply in the Mainland will be inadequate and dependence on imports will increase.

Coastal areas need to get used to the so-called high inventory

Recalling the last time methanol appeared in coastal high inventory of 1.2 million tons, domestic methanol to olefin plants are very few, and the annual apparent consumption of methanol in China is only about 30 million tons. Now the environment is that we are in a market with an annual production and sales of 60 million tons. In coastal areas, the methanol-to-olefin unit alone needs 45-600,000 tons of standing stock of raw materials. Statistically speaking, the last time there was a high inventory in coastal areas, many reservoirs were not included in the statistical scope, so the actual inventory is larger than the 1.2 million tons. This year’s actual situation is that although the scope of statistics has been expanded, there are still many stocks that have not been entered. If not for the tight storage capacity along the coast and queuing to unload ships, the actual peak value of methanol inventory will be about 130-14 million tons. It can be said that the first quarter of methanol depot is very successful. Moreover, coastal areas should be accustomed to high inventory in the future, because downstream factories expand capacity and increase stock, if the normal inventory in coastal areas is less than 800,000 tons, there may be a situation of unavailability.

Azodicarbonamide (AC foaming Agent)

Price spreads between the Mainland and East China may be closed for a long time

Arbitrage between Northwest China and East China has been closed for one month, but the Northwest China is still in a state of de-inventory, indicating that the demand of the mainland is increasing gradually. Overall, the demand of the mainland is very strong in the first quarter. Even if the formaldehyde starts to decline, the actual production and sales are also very considerable. Taking southern Shandong-northern Jiangsu as an example, the start of plate market this year is higher than last year. The decline of formaldehyde start-up in southern Shandong-northern Jiangsu caused the price of surrounding formaldehyde to soar. Goods from Hebei, northern Shanxi and Henan flowed into the area. In fact, the consumption of formaldehyde for methanol did not decrease, but increased.

For the Mainland, there may be a long-term closure of arbitrage with East China this year, mainly due to the new demand of the Mainland. Two sets of methanol-to-olefin units totalling 1.3 million tons were opened in Northwest China. Similar units were also installed in Shandong and Anhui provinces. The digestion and regionalization of methanol will be the main trend. Then the extension radius of imported goods will be expanded. It is an indisputable fact that the demand for imported goods will increase. For now, it is expected that by November 2019, the Mainland will not be able to open an arbitrage window with East China.

At present, the profits of imports have remained negative for more than a month. It is not valid to expect that futures will be depressed and port prices will be depressed, thus causing the decline of the mainland. If this logic is implemented, only importers will be injured.

Iranian devices are “innocent”

Since October last year, the Iranian device has been a constant “talk”. As soon as the price went up, the Iranian devices went out of order, and there were unexpected turnovers, even the expectation of early repairs. When prices fell, Iranian devices were amazingly good, and there were signs of driving the devices that had not yet been built. The same source even saw a massive overhaul of Iranian installations on Monday and a concentrated restart on Thursday. Both bulls and bears will make full use of Iranian devices thousands of miles away.

Market Needs Rational View


It is undeniable that in the first quarter of this year, the stocks of all kinds of chemical products are higher than the same period in previous years, but they are not high enough to make the market “crash”. With the rising prices of raw materials such as coal and crude oil, the value of basic chemical products has been underestimated and the profits of production enterprises have shrunk seriously. The author has met the market situation when consulting the last round of methanol fell to 1800 yuan/ton. To be frank, the power coal (621, -0.40, -0.06%) at that time was around 300 yuan/ton, and crude oil was around 40 dollars/barrel. At present, we are facing 600 yuan per ton of power coal and 70 dollars per barrel of crude oil.

At this time, to squeeze the small profits of production enterprises is somewhat unhuman, in other words, the space downward is extremely limited. But some people’s logic is very strange. They think that the basic aspects of chemical products can’t work. Then they go short of the chemical products and their raw materials. But when they get empty of coal and crude oil, they get stuck and start squeezing the profits of the production enterprises. They think that the profits of enterprises are very high and the profits are not high. They think that the industry is clear. Anyway, there are reasons.

At present, the market fundamentals are improving effectively, and the decline in inventory has proved that the supply and demand structure has improved. It seems irrational to find reasons to continue short the market at this time. The market needs to be treated rationally. Both the rise and fall have their inherent logic. The author does not want the irrational rise in the third quarter of last year, nor the irrational fall in the fourth quarter of last year. It is too biased to deliberately “demonize” a certain kind of product. What hurts is the fragile market, which is the vast number of enterprises.