Methanol lacks medium-term upside

At present, the supply and demand side of methanol is still weak, and the crude oil market is uncertain. In this context, the methanol 2009 contract can not go further, the market outlook is expected to face the risk of pressure.

Since entering April, the domestic methanol futures contract in 2009 fell to 1,619 CNY/ton to stabilize, and then rebounded strongly. The futures price closed up for six consecutive years and returned to 1,869 CNY/ton last Friday, with a cumulative increase of 15.44%. . The author believes that the discussion of production reductions in oil-producing countries creates a macro-warm atmosphere. The reduction in value-added tax is expected to increase the buying power of methanol at domestic ports. The coal-to-methanol cost support and the expected speculation of spring inspections, etc., have promoted the rapid rise in methanol futures prices main reason.

Negotiations for oil-producing countries ended without success

In order to reduce the negative impact of public events on oil prices and reverse the unfavorable situation of severe imbalances in the supply and demand of the oil market, the United States has recently coordinated most of the world's oil-producing countries for joint discussions on production cuts. Although OPEC + oil-producing countries have reached a draft reduction agreement: from May 1, 2020, the production will be reduced by 10 million barrels per day for two months; from July to December 2020, the production will be reduced by 8 million barrels per day; since 2021 From January to April 2022, the output was reduced by 6 million barrels per day. Due to the unexpected disruption in Mexico and the boycott of the new OPEC + production cut agreement, the oil-producing countries were ultimately unable to achieve substantial results.

The current development of social and public events has caused the global economy to stagnate. Global oil demand has fallen by about 30%, or about 30 million barrels per day. It is expected that the global crude oil demand will shrink by 6.8 million barrels per day in 2020. Poor demand will make the global crude oil market pessimistic. If there is no active intervention on the supply side of the oil market, the imbalance between the supply and demand of crude oil is likely to intensify. The previously warm macro atmosphere was once again frustrated, which indirectly affected the confidence of the methanol market to do more.

Spring inspection scale may not be as expected

With the rapid rebound of domestic methanol futures, spot stocks rose significantly, and some regions rose by more than 100. The data shows that methanol companies in the Baoji area of Guanzhong rely on high-quality and convenient transportation conditions to increase prices four times in a week, with a cumulative increase of 90 CNY/ton. At the same time, methanol quotations in Shandong Lunan and Lubei regions have actively followed up, with the increase rate ranging from 80 to 100 CNY/ton, and methanol quotations in Shanxi, Hebei, and Henan regions have also generally risen. The rebound in spot quotations alleviated the previous general loss of coal-to-methanol plants, the willingness of companies to overhaul has declined, and supply expectations have been strengthened again.

Benefited from the stable results of the prevention and control of public events in the country, many methanol plants have reported plans for maintenance from April to May, involving a production capacity of about 15 million tons. Among them, there are about 10 in Northwest China, involving a production capacity of 6.9 million tons; 4 in Shandong, involving a production capacity of about 2.92 million tons; 3 in Central China, involving a production capacity of about 1.6 million tons; and 4 in North China, involving a production capacity of about 470,000 tons . The current capacity under maintenance is about 4.865 million tons, which is relatively small (the total methanol production capacity in the country is 90 million tons) and is lower than the same period last year. Some devices have been postponed to May-June due to spare parts, and it is not even ruled out that they will be postponed to fall. In other words, this year's domestic methanol spring maintenance scale may not be as expected, and the market will have limited profit.

Olefin operation will be greatly reduced

In the context of the current high coal price and low oil price, the profit of oil-to-olefins has expanded significantly, while the profit of methanol-to-olefins has been poor, resulting in multiple olefin projects having maintenance plans in April. Data show that in early April, Shenhua Yulin 600,000 tons / year olefin and Shandong Yangmei Hengtong 200,000 tons / year olefin have been repaired; Zhejiang Xingxing 690,000 tons / year olefin has not yet restarted; Nanjing Chengzhi 600,000 tons / year olefin Overhaul is planned on April 15; Inner Mongolia Jiutai 600,000 tons / year olefins, Ningxia Baofeng 600,000 tons / year olefins, and China Coal Mongolia University 600,000 tons / year olefins all have maintenance plans in the later period. Overall, olefins, the largest demand for methanol, will face the risk of a substantial reduction in construction.

In the context of increased supply and weakened demand, the total inventory of methanol ports in China exceeded one million tons. According to statistics, as of early April, the methanol inventory in coastal areas (Jiangsu, Zhejiang and South China) was 1.0705 million tons. As this year's external arbitrage space continues to open, the average is about 130 CNY/ton, the first two months of imports are higher than the same period last year, the methanol import scale in March is expected to be 800,000-850,000 tons, in April or 900,000-950,000 Ton.

In summary, the supply and demand side of methanol is still weak, and the crude oil market is uncertain, and macroeconomic expectations are uncertain. The methanol 2009 contract lacked the basis for a medium-term rise, and futures prices could not rise further. The market outlook is expected to face pressure.