“Since October, imported methanol has entered the Shandong market, which is almost impossible in the past.” A senior methanol market person in Shandong recently told reporters. In fact, not only Shandong Province, but also some inland areas have experienced the phenomenon of import methanol backflow, which has changed the situation of methanol transportation from west to East and from north to south for many years.
It is understood that this has a lot to do with the recent changes in the port market. The difference between methanol price and inland price in East China port weakened, and the arbitrage window between port and inland was closed, which changed the role of port as the main methanol consumption market to some extent.
Role change of port A’s main sales area
“The port market is positioned as a distribution center in the industry. In the past, as the main market area of methanol, the port has fast turnover inventory and strong digestion capacity around. ” Shi Kaifang, an analyst with Yide futures, told the futures daily that due to the accumulation of import increment this year, the methanol inventory in the port area continued to be high, and the overall market demand was not good. In the process of price decline, the inventory digestion cycle in the port area lengthened, thus forming a price depression.
In the interview, the reporter of futures daily learned that the main reason for the overstock of port inventory is the continuous import of methanol.
“There are many new methanol plants in the international market this year. By the end of 2018, the annual production capacity of the new 1.65 million tons of methanol plant in Iran has been stable. The new 2.2 million tons / year plant in the first half of this year has also been put into operation, and the export to China has increased greatly. After the port area can not get the northwest supply, it adopts a large number of imports to stabilize the supply. ” Yu Pengsen, an analyst at Zhaojin futures, said.
As of October this year, the domestic methanol import volume has been the same as that of the whole year last year, resulting in a large backlog of inventory in the port area. In addition, affected by the explosion in Xiangshui and other places in Jiangsu Province, it is difficult to ship methanol in the port area, the inventory is continuously higher than 1 million tons, and the price is constantly weakening.
According to market participants, after the price of methanol in the port area was lower than that in the surrounding areas, there was a reverse flow of goods, which suppressed the price in the surrounding areas of East China, and then forced the price to be reduced inland. At present, the low-cost imported methanol accounts for a large proportion in the port area. In this context, the price difference between Taicang port and Northern Shandong Province has been weakening, and even some periods of port methanol flows back to northern Shandong.
In the view of the insiders, the previous decline in domestic methanol price started from the poor sales in the production area and the price reduction to the warehouse. However, since the second half of this year, the self consumption capacity of the production area has increased, the export sales have decreased, and the price has been on the high side. However, the price of imported methanol remains weak due to the decrease of demand and increase of supply. In the domestic methanol market, there is a rare situation that the imported goods force the domestic goods to reduce the price.
According to Yu Pengsen, after the National Day holiday, due to the shortage of methanol in the northwest and high price, the price difference with Shandong in a short period of time is zero, and the arbitrage window is closed, Shandong area is faced with the situation of no goods available after the consumption of the early stock.
“At that time, the price of methanol in the northwest was 2300 yuan / ton, that in Shandong was 2300 yuan / ton, and that in East China was 2300 yuan / ton. However, with the decline of futures prices, the spot market in East China weakened, and the logistics channels in East China and Shandong opened immediately. ” Yu Pengsen said that in the middle of October, only part of the reservoirs in Taizhou and Nantong began to flow back goods to Shandong. Later, with the simultaneous decline of current prices, the main reservoirs along the Yangtze River basically opened logistics channels with Shandong.
In his impression, only in 2008-2009 international methanol had serious reflux. At that time, the imported goods once went up to Wuhan along the Yangtze River, Rizhao and other Shandong ports had imported goods, and triggered China’s anti-dumping investigation against methanol in the Middle East.
“The frequency of such backflow may increase if the port inventory is not effectively removed.” Wang Pu, an analyst at jinlianchuang, said.
In the view of the insiders, in the past, “west to East alcohol transportation” was due to the increasing demand for olefins at the port in recent years, and the price of imported methanol continued to be too high. Inland methanol became the main procurement channel for olefin enterprises at the port. In the future, with the increase of imported methanol, it is difficult for inland methanol to be digested in the port area.
B. increase in supply and decrease in demand after import volume
At present, every action of port methanol undoubtedly affects the nerve of the market. Since the national day, the methanol market has declined by nearly 500 yuan / ton. The reporter found that, unlike in the past, the decline of methanol market in this round obviously shows that the supply and demand of inland areas is stronger than that of ports.
“Before the National Day holiday, the market had hoped that the inland methanol to olefin unit would resume production or be put into operation to solve the inventory problem. However, according to the calculation results of the balance sheet after the holiday, it is estimated that the port inventory can be reduced by 300000 tons within three months, when the total inventory is still over 900000 tons, and the total inventory remains at a high level over the years.” Jia Ruibin, director of Tianfeng Futures Research Institute, said that based on this expectation, most market participants no longer regard the price strength in inland areas as a support.
At the same time, due to upstream maintenance and downstream resumption of work, inland methanol sales performed well, and most of the plants have strong price behavior. This has led to obvious rhythm differences in the market, and even the situation that the methanol price in Shandong is significantly higher than that in East China, resulting in a rare inland water rise situation for many years.
However, in late October, due to the obvious decrease of export volume, the weak situation of inland price confirmed the conclusion that the speed of national inventory removal was not as expected. Prices continue to fall from the port and continue to spread inland.
In just over a week, this situation, like dominoes, was gradually transmitted from the port to the inland area, and led to a nationwide price drop.
Combing the logic of this round of methanol decline, the reporter found that under the background of large volume of imports, the supply and demand of methanol market has become the main market contradiction that is difficult to solve at present.
“At present, a large amount of goods from Iran flow to China, and since the beginning of the year, 2.3 million tons of Kaveh unit in Iran has been put into trial operation. Recently, after the test run of 1.65 million tons of busher, it is planned to transport methanol to China at the end of November. In the future, kimiya’s 1.65 million tons of unit is planned to be put into trial operation at the end of the year or the first quarter of next year. In this expectation, methanol import increase will continue to suppress the height of port market rebound. ” Shi Kaifang said.
According to statistics, under the condition that Iran’s low-cost goods flow in a large amount, the total amount of domestic methanol imports this year will be about 10.5 million tons, which will cause short-term pressure on the coastal market. Under the impact of low-cost imported methanol, each tank farm in the port has been accumulating and once reached the full tank level. Some tank farms reduce the inventory pressure by increasing storage fees, but high inventory has become a normal phenomenon. In the case of poor demand, the inventory is always difficult to digest quickly. The most direct performance of the suppression of the inventory is the lower port price.
In addition to import and inventory, the production of new inland capacity is also one of the reasons for this round of decline, such as Inner Mongolia Rongxin (900000 tons / year), Yankuang Yulin (700000 tons / year), Hubei Yingde (500000 tons / year), Shanxi coal Zhongneng (300000 tons / year), etc.
From the aspect of demand, it is difficult to reverse the current decline of methanol downstream this winter. The traditional downstream start-up is faced with great variables. The air supply of formaldehyde manufacturers in Linyi, Shandong Province can not be guaranteed. It is directly linked to air pollution prevention and control. If there is an orange warning, it can only be passively stopped. “This year’s accident in Yima also hit it obviously. Although the market profit of DME is higher now, the construction has also experienced a downturn before. In addition to acetic acid, other varieties maintain about 80% of the start-up load, and other multi-dimensional low start-up load. ” Shi explained.
The start-up of new downstream olefins also showed a differentiation state. In addition to the normal full load production of Baofeng phase II newly started by the mainland integrated olefin enterprises, some of the East China Overseas olefin production enterprises have been shut down for maintenance. Most of the start-up enterprises maintain 70-80% of the operating load, and the increase of olefin demand this winter is relatively limited.
In the view of the insiders, with the addition of refining and production cycle, the new production capacity will reduce the economy of MTO, which will suppress the profits of olefin end in the medium and long term, change the industrial structure of olefin, and then transmit to the methanol industry, forming a certain pressure on its price.
C. several companies in the industrial chain are happy and worried
Since this round of decline, the judgment on the bottom of methanol industry chain has become more and more vague, and the market has broken through the psychological expectations of industry people one after another. Moreover, the decline of methanol also has a greater impact on the distribution of industrial chain profits. The upstream profits are significantly reduced compared with September, the downstream profits have improved to some extent, and traders are also showing a significant differentiation.
“Traders who had fantasies about the bottom have given up copying the bottom; production enterprises are also pessimistic about this round of sharp decline; downstream enterprises generally choose to purchase on demand after comprehensive profit evaluation, and some will choose to store low-cost goods in storage and constantly replace them to reduce costs.” Shi Kaifang said.
At present, methanol industry chain is more cautious, mainly due to the fall of futures leading to the collapse of confidence. Although the upstream maintains low inventory, but the price is in the process of falling, at the same time, it is worried about the subsequent increase of inventory. Intermediate traders are most sensitive to the fluctuation of futures price. Weak basis and short selling can also reflect the weak mentality of traders. In the downstream, the whole energy chemical industry chain is in the capacity release cycle, and most varieties are far away from each other and far from each other.
“The biggest beneficiaries of this round of decline are downstream methanol enterprises, especially MTO plants.” According to Ye Weile, an analyst at Guotai Junan Futures, the profit of MTO plant from using methanol per ton increased from 200 yuan / ton to 400 yuan / ton in the course of this decline, and the profit level was at the high level in 2016-2019.
Compared with MTO plant, methanol plant is a bit miserable, the profit level has been at a low level, and even some enterprises have lost money. However, due to the different scale, the cost before the methanol plant is also different. In the face of this decline, the willingness of methanol factories to participate in futures has greatly increased. Some methanol factories have locked most of their profits through selling hedging, avoiding the risk of price decline.
? just as the so-called “several happy and several sad”, the reporter learned that the methanol production enterprises in the East and some inland traders were the most “injured” in this round of decline.
“Affected by the high price of power coal and the impact of low import price, the methanol production enterprises in the east of this year are actually in a loss state most of the time.” According to Ye Weile, the high price of producing area and low price of selling place have greatly reduced the living space of traders, and most of them are in the state of looking for low price goods everywhere, often losing money. For the pure import enterprises, because the import has always been profitable, on the contrary, they are doing well.
The reporter learned that port market transactions are more active, traders have a strong sense of hedging, and they will combine their own situation with futures to optimize trading strategies, so they can timely hedge risks. Compared with the port market, the risk of single side spot operation of inland traders is greater, and the operation pressure is also greater.
Miao Baihong, deputy general manager of Henan Huitong energy, said frankly that influenced by the traditional old thinking, most inland traders have the mentality of copying the bottom, but the price of methanol in the mainland has gradually declined from a high level, leading to the collapse of traders’ mentality.
In response, yuan gaojun, general manager of Shandong Ruite Supply Chain Service Co., Ltd., also said that this year’s market is very difficult for inland traders, with 60% or even 80% of them losing money. “Usually, the pace of trade is relatively fast, and traders with first-hand information and quick response may also earn some money, while those with slower response are basically losing money.” In his view, inland methanol traders may experience a major reshuffle.
The reporter learned that in this round of market, some small methanol traders have been eliminated, and the methanol traders in the market have shown a reduction.
In Miao Baihong’s view, with the increase of international production capacity in the future, under the condition of low cost, the imported goods will gradually squeeze the profits of domestic coal to methanol. In the past, the situation of “west to East alcohol transportation” and “north to South alcohol transfer” will become the past, and the situation of port backflow will occur from time to time. “In this context, spot trade and import chamber of commerce are better, and the living space of inland traders will be gradually squeezed.”
D. methanol market may be colder this winter
In the past winter, methanol market has a “story” to tell. The constant fermentation of gas limiting factors often makes the methanol market “warm winter” more likely in the fourth quarter. However, this year’s market has a different “winter”.
In Ye Weile’s view, in the fourth quarter of recent years, there are more hype points in the methanol supply end, including environmental protection and natural gas limitation, both of which will cause problems in the methanol supply.
In the winter of 2016, in order to control the haze, more coke oven gas methanol plants in Hebei, Henan and Shanxi were shut down and the negative load was reduced, and the monthly average methanol supply was reduced by 140000 tons. In 2017, due to the environmental supervision, the coke oven gas methanol plants in Hebei and Shanxi were shut down to reduce the load, and the monthly average supply was reduced by 90000 tons.
At the same time, the gas limiting factors will also affect the fermentation in the fourth quarter. Due to the low temperature in winter in the north, gas supply enterprises will reduce the industrial gas supply in order to give priority to civil heating. In case of shortage of raw materials, natural gas methanol plants often stop or reduce load. In the fourth quarter of 2016, the monthly average supply of gas head methanol unit decreased by 510000 tons due to gas restriction, and in the fourth quarter of 2017, the monthly average supply of gas head unit decreased by 610000 tons.
After several previous rounds of environmental protection production restriction, compared with the previous winter, methanol production enterprises are less affected by environmental protection production restriction this year, and the natural gas supply is relatively loose, and the production of gas head enterprises is significantly reduced due to gas restriction this year. “On the one hand, the natural gas gap is not large, on the other hand, the methanol boiler and traditional demand are less than expected, combined with different inventory levels this year, the” story “of the supply side cannot affect the big trend.” Jia said.
The fourth quarter was originally the time when methanol went to storage seasonally. However, in winter 2019, methanol inventory is still high. It is understood that methanol imports remained at a high level in the winter of this year and contracted in October and November of previous years. Among them, 560000 tons were imported in October 2017, with a monthly average of 680000 tons; 580000 tons were imported in November 2018, with a monthly average of 620000 tons. In October and November 2019, imports are expected to exceed 1 million tons, which is above the monthly average.
“When the port inventory level is within 700000 tons, the supply and demand changes of 200000-300000 tons are likely to cause extreme situation in the market. When the inventory in September is more than 1.2 million tons, the supply and demand changes of 200000-300000 tons are difficult to dominate the market. ” Industry insiders said.
In the opinion of Pengsen, the methanol market will continue its current pattern this winter. Due to the limitation of natural gas, the external supply of Northwest production area will continue to shrink, but the possibility of import reduction is small. The main procurement of olefin plant is still import, and the demand for domestic products is not high, which may continue to around March next year.
“This winter’s market is likely to be colder than before, and there is not much hope for next spring.” Miao Baihong predicted.
It is worth noting that near to the delivery of 2001 futures contract, the return of futures has become the ultimate logic of the market. Under the import pressure, the port market price may still be the lowest in the whole market converted into futures market price. At that time, the warehouse receipt will appear in the port market, and the futures price will also be subject to the port market. “The price decline will start from the port market, and the inland market will also be under pressure when the arbitrage window is closed, even if the rebound has no impact on the futures price. At that time, it should be noted whether the port methanol will continue to accumulate. ” Ye Weile said.
There will also be some changes in the pattern of production and marketing. In the future, the trend of methanol market in Shandong and Lianghu will determine the situation of the whole country. The goods in Guanzhong will be more consumed in Lianghu area than sold to East China and Shandong. “Shandong is facing the competition of northwest and imported methanol. The specific consumption of Shandong will determine the speed of port going to storage and northwest price trend.” Yu Pengsen said.
Looking back, the methanol price drop started from the demand gap, was impacted by the increase in supply, in the final analysis, was affected by the changes in the macro environment, showing the industrial cycle. After the cold winter baptism of methanol market, the market structure will be more optimized. Industry insiders said that although now in the “cold winter”, but with the marginal improvement, there is still hope in the heart.
