The effect of supply-side tightening on methanol is still fermented

As a barometer of product market, the change of supply and demand has always been one of the key points in various industries. The relationship between supply and demand is the relationship between supply and demand of commodities under the condition of commodity economy. It is the reflection of the relationship between production and consumption in the market.

Since November 2017, China's methanol market has risen strongly. In addition to the strong linkage of futures market, the boosting effect of supply-side tightening logic on the evolution of the market has been obvious, and this factor is still fermenting in December.

In addition to the previous shutdown of some projects in Inner Mongolia and the shrinkage of coking production and supply in the north, the intensification of natural gas supply shortage in recent days has led to the forced shutdown of some domestic gas-to-methanol plants, involving enterprises such as Cabernet and Ningyuan, with a total capacity of 1.35 million tons; the following projects with an annual output of 770,000 tons in Sichuan and Uygur also have maintenance expectations.

In view of the impact of Sichuan-Chongqing gas head shutdown, except that the direct tightening of cargo volume has a strong pull on the local market (some local enterprises have climbed to 3500 CNY/ton, which is higher than 500 CNY/ton at the beginning of December), the attractiveness of goods in Northwest China will be significantly increased under the high local prices, such as Gansu and Guanzhong partial cargo inflow. In addition, some of Xinjiang's early inflows are still acceptable. In addition, it is reported that some of Guizhou's cargo volume also does not rule out the possibility of inflow. At the same time, under normal operation of Sichuan-Chongqing methanol plant, as a "small production area" of cargo outflow, part of the cargo along the Yangtze River mostly enters Nanjing and Changzhou, and most of the cargo comes come from two methanol plants in Chongqing. It is worth mentioning that with the impact of Hengsman's annual production of 740,000 tons of MTBE in July this year, Nanjing's methanol intake into Sichuan and Chongqing increased, which led to the reduction or almost no inland river shipping inflow into Changzhou in the second half of the year. It is known that during the conventional operation period, the methanol discharge volume in Chongqing area is between 40,000 tons/month, mostly about the terminal length, and there is a slightly higher methanol discharge volume in some periods. After the shutdown of PetroChina/Sinopec, Nanjing will face a shortage of 40,000-50,000 tons of cargo. In addition, due to the influence of the recent International Day of Sacrifice, the operation of ships in this area is not smooth, and the supply of cargo in this area is also very tight. It is also known that part of the cargo will be transferred to Taihu Warehouse to pick up cargo. Further attention should be paid to the follow-up operation of filling gaps. The downstream demand side of methanol has also changed with the tightening of the supply side and the dramatic increase of the price of raw methanol. For example, although the price of raw material methanol has risen sharply, the operating space of downstream terminal industries has been under pressure, such as dimethyl ether, the theoretical profit range of formaldehyde has been reduced; the economy of new downstream coal methanol to olefins has weakened; meanwhile, domestic MTO/P projects have been shut down/reduced, and some purchased MTO units in ports have not been restored. In addition, at the end of the year, the weak demand characteristics of the traditional industries still exist, and the relatively weak logic of the follow-up demand side has not changed!

It is worth mentioning that, under the background of changing supply and demand and continuous pressure of environmental protection policy, during the vigorous promotion and implementation of "coal-to-gas" in winter this year, the northern market driven by methanol fuel demand has gradually begun to breed, of course, the geographical scope of the downstream development. Close attention should be paid to the promotion efforts.