News: 1. According to Longzhong Information, as of the week ending October 23, methanol inventory at ports in East China was 1.2326 million tons, up from the previous week...
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News: 1. According to Longzhong Information, as of the week ending October 23, methanol inventory at ports in East China was 1.2326 million tons, an increase of 9,000 tons compared to the previous week； Methanol inventory at ports in South China is 127,200 tons, down by 1,100 tons from last week. 2. According to incomplete data from Longzhong Information, as of October 23, the inventory levels of some representative methanol producers in inland areas were approximately 508,100 tons (508,100 metric tons), an increase of 94,648 tons (94,640 metric tons) compared to the previous week, representing a growth rate of 22.89%. Market price: The prevailing price in the northwestern Inner Mongolia region is 1,875 yuan per ton, +0 ； The prevailing price in the Taicang area of East China is 2,025 yuan per ton, -25. Warehouse receipt inventory: 4,147 warehouse receipts, +0, with 523 valid forecasts. Major positions: The top 20 long positions total 499,090, an increase of 107,996 ； Short positions: 655,409, +137,738. Both long and short positions increased, resulting in an increase in net short positions. Summary: Plants that underwent maintenance earlier are now resuming operations on a large scale, and the increased supply has led to a significant rise in corporate inventories over the past two weeks. Spot prices in the northwest region have dropped sharply; going forward, attention should be paid to the impact of the “2+26” policy on the operation of methanol plants in the north China region. On the import side, due to typhoons and local regulatory measures prior to the holiday, the unloading of imported cargo upon arrival at the ports was delayed; as a result, the volume of cargo arriving at the ports remained high in the short term, and port inventory reduction fell short of expectations. From the demand side, methanol-to-olefins plants along the coast have been operating steadily recently, but there are no expectations of further growth. Additionally, a weakening trend in the price of ethylene and methanol in Northeast Asia could affect the economic viability of methanol production, thus having a negative impact on demand for methanol. Technically, there has been an increase in positions for the MA2001 contract, and the futures price has fallen below previous support levels; therefore, a bearish outlook is appropriate in the short term
After the long holiday period, as restrictions on the transportation of hazardous chemicals were eased, and coupled with the gradual resumption of production capacity for methanol (1925, -36.00, -1.84%) following various maintenance activities, the tight supply situation gave way to expectations of improved supply conditions. As a result, methanol futures stopped rising and began to fall, experiencing a significant one-way decline of nearly 20%. As futures prices declined, port spot prices and paper product prices also fell. The decline in port spot prices was transmitted to the surrounding inland markets through road and sea transport, thereby putting downward pressure on prices in those inland areas as well. This created a pattern of price drops accompanied by inventory reduction, and this trend remains strong to this day. The market atmosphere is weak; aside from factors related to the weakening macroeconomy, the fundamental conditions of methanol have a significant impact on prices. Data source: Jinchuang. In terms of supply, based on the current information, high import volumes will prevail in October and November; there may be a decrease in December due to reduced imports from Southeast Asia and the Americas. So considering these negative factors, high import levels and high inventory levels still persist. Looking at the operational status in China, as of November 12, the operating rate of methanol production plants in that country was 67%, which is roughly on par with the average annual operating rate. However, this represents a peak in terms of operational activity recently. It should be noted that during the winters of 2016–2018, due to issues with natural gas supply, the overall level of operations in China declined. This year, only some plants have stopped operating, while most others continue to function. The impact of these factors beyond what was expected has also contributed to a decline in China’s domestic production levels. Data source: Jinchuang. In terms of demand, the demand for olefins remains relatively stable at present; especially when certain enterprises begin operations or restart production, demand in the domestic market improves significantly. This can also be seen from the relative prices in the domestic market recently, with prices in Inner Mongolia being on par with those at ports at certain times. Currently, the operating rate of olefins in China is 80%, which is 4 percentage points higher than the average annual level; therefore, the demand for olefins drives the relatively high levels in these areas where olefins are produced. Meanwhile, the operation rates in the traditional downstream sectors are not very good at present: the operation rate for formaldehyde is 28%, and that for dimethyl ether is 30.60%, both of which are below the average operation rates for this year. It should also be noted that this year’s mild winter will increase the likelihood of foggy weather in the northern regions, and foggy weather has a significant impact on environmental protection as well as on industrial operations downstream; this is relatively negative news. In addition, currently all energy and chemical products are in a phase of capacity expansion. Next year, there will still be a considerable amount of new production capacity both internationally and domestically. Ethylene glycol and PP are in a reverse market situation, with contracts for future delivery trading at a discount; therefore, the petrochemical industry will remain in a phase of structural adjustment for some time to come.