Market Analysis - Monthly Report - October, 2020 - DMF

Market overview for the year

Domestic BDO Price Trend Chart 2018-2020

In October, the domestic DMF market shot up unusually. After National Day holiday factory inventory accumulation, slow growth, after the beginning of the return after the holiday, some factories slightly cut the price of goods, the focus of market negotiations slightly down. However, as the downstream pulp industry uniformly increases the price,to boost the market mentality, at the same time, DMF enterprises new moon orders are in good condition, and export orders continue to follow up, thesupply side inventory pressure relieved, part of the continued decline intention weakened. Towards the middle of the year, the factory control intensified, some of them implemented the limited sales policy, and the DMF market entered the upward channel again. Buy role to stimulate the downstream part just to cover up continue to follow up, together with pulp factory orders rose in October, high work load, low recovery DMF yields at the same time,demand for the overall good follow up, DMF factory shipment smooth, offer is rising, the market rally intensified, high rapid breakthrough ten thousand yuan, hit a record high. At the same time, the supply of goods is also gradually intensified. In the late part of the year, some factories suspended the offer, the price is more chaotic, the actual transaction of a single agreement.Downstream, due to the increase in cost pressure, there is a certain demand forcost reduction, and there is obvious resistance to the high price of raw materials. At the end of the month, Hualu Hengsheng began to place spot goodson the market gradually, at the same time, DMF price rise began to slow down,market participants' attitude of price fixation became loose, part of thedelivery intention increased, the offer high dipped, pay attention to thefollow-up factory volume situation and price policy guidance.

Overall market analysis

Factory installation DMF this month

Raw material cost and change analysis

Methanol: In the short term, the supply pattern in November is still neutral and loose. As winter approaches, natural gas production restrictions in the southwest and northwest regions gradually start, and environmental protection production restrictions in the Beijing-Tianjin-Hebei region also affect the supply in Shanxi and other places, and the total supply is expected to decrease slightly. However, it should alsobe noted that the supporting methanol plant of Yulin Phase II of China Coal is expected to start in the fourth quarter, the import volume of Iran has not decreased significantly in November, and the olefins plant in the port area is also scheduled for overhaul in the fourth quarter. The demand margin is tightening, while the supply has not shrunk significantly. It is expected that the domestic methanol market will operate in the current range in a volatile fashion.

Main downstream start-up analysis

This month, the focus of the domestic slurry market has risen. Driven by rising costs, slurry manufacturers uniformly raised RMB 1,200/ton on September 7. In addition, end users have replenishment requirements before the festival, and slurry manufacturers have relatively stable operating loads.

Next month's Market Trend Forecast

Views and Summary

In general, with the increase of resistance to high prices in the downstream, the enthusiasm to start work is suppressed, and some LARGE DMF factories gradually put the spot goods on the market, the SHORTAGE of DMF supply may be gradually eased, market participants are inunstable state of mind at the end of the month, some bearish sentiment isincreased, and the intention to ship goods is improved. It is expected that there will be a certain correction space in the market next month.