Methanol: the upstream and downstream markets increased significantly

This week, the domestic methanol market rose significantly, and the prices of energy products such as crude oil and natural gas rose sharply, driving the upward shift of the price focus of coal and downstream coal chemical products. During the week, the macro risk events fluctuated, the armed conflict between Russia and Ukraine escalated, the intensive sanctions imposed by Europe and the United States on Russia effectively affected its crude oil exports, the fear of market supply interruption continued to price the risk, and the international crude oil continued to rise violently. The highest in Brent this week was close to $120 / barrel. Then, the negotiation contact between Russia and Ukraine eased the situation to a certain extent, The imminent landing of the Iranian nuclear agreement also makes the market optimistic that Iranian oil will return to the market to fill part of the demand gap, and the oil price has fallen from a ten-year high.

In terms of thermal coal, the national development and Reform Commission issued the notice on further improving the coal market price formation mechanism. However, at the same time, it was also explained at relevant meetings that the medium and long-term transaction price is mainly to guide the long-term negotiation price, and the price limit of non electricity users and chemical coal is liberalized. This week, thermal coal futures rose and fell, and the weekly line closed positive.

Recently, the domestic methanol supply side has rebounded slightly, and the domestic operating rate rose by about 2% this week. The main reason is that the southwest and northwest gas head devices have been restored this week. With the end of the Winter Olympic Games, the early environmental protection shutdown devices in North China have also been restarted in the near future. However, the national two sessions will be held in March. In the later part of the week, the environmental protection control in some areas of Shandong will be tightened, and the traditional spring inspection time for domestic methanol enterprises will begin in March every year. From the historical data, the methanol market price performance has been supported to some extent during the spring inspection over the years. At present, some enterprises have predicted the time of spring inspection, and the specific implementation needs to be followed up.

In terms of port inventory, floating warehouses were unloaded successively in the early stage, and the margin of demand for some olefin units decreased. The performance of port inventory rebounded this week. According to incomplete statistics, the total port methanol inventory was about 792000 tons, an increase of about 42000 tons compared with last week. However, on a year-on-year basis, the current port inventory is still at a low level over the years. Recently, it is in the window of import contraction, and the port market mentality is mostly strong.

From the perspective of imports over the years, methanol imports from January to March are at a low level, mainly due to the demand for heating in winter. In order to protect civil use and limit the consumption of industrial methanol in Iran and other places, most local natural gas methanol plants are faced with regional and phased decline shutdown, while Iran and its surrounding areas are the largest source of imports in China, Iran's local parking decline will directly affect methanol imports for about a month. Recently, with the intensification of the conflict between Russia and Ukraine, the European region has also been affected one after another, and the local production capacity is difficult to meet the demand. The European market has been imported for a long time, and the local methanol and raw natural gas supply are mostly dependent on Russia. At present, European prices have begun to rise. If the subsequent supply is confirmed to have a terminal, it may divert the methanol production capacity of the United States, Trinidad and even the Middle East.

At present, the domestic market demand is good. In the traditional downstream, the operation of formaldehyde devices is stable this week. With the continuous purchase of formaldehyde by downstream plate factories, the demand support will reach a high point, and the industrial operating rate will remain high. Shandong Lianyi, the main device, has actively prepared goods in the near future, and according to the inventory level, it is good; The acetic acid plant fluctuated little, and the operating rate of the industry remained at a high level; MTBE Shandong Yuhuang 500000 ton unit was started and shipped normally. Shandong Shenchi will also have a restart plan in the near future, and the operating rate has increased significantly.

In terms of coal to olefins, the operating rate of domestic MTO units has decreased slightly since. The main reason is the tight profit performance. Recently, with the rapid rise of methanol price, the performance of olefins and downstream has weakened again. Some MTO units shut down / decreased during the week to cope with the profit performance, and the supporting methanol units increased the export volume. Domestic downstream demand is basically at a high level. After the Winter Olympics, the downstream is actively preparing goods. At present, some inventories are good, and the intention to receive goods has converged, while the tight profit at the olefin end has suppressed the demand performance. During the two sessions in March, the safety and environmental protection regulations are expected to still affect the operating rate of some markets, and the demand margin may be insufficient if it continues to rise.

In the future, the news on the energy side is disturbed frequently, the Iranian nuclear negotiations may turn, and the crude oil price falls from a high level. However, the macro fluctuation has not dissipated, and the short-term market may still be affected. From the supply side, the early load reduction and parking devices are gradually restored, and the supply performance increased slightly. However, in March, with the arrival of the two sessions of the National People's Congress and the annual spring overhaul, the future supply performance may decline from the stage high. The traditional downstream operating rate on the demand side has rebounded significantly, but with the recent replenishment, some inventory levels have risen considerably. Due to the rise of methanol, the downstream of olefins is troubled by profits, and the operating rate has declined compared with that after. The export of methanol in Shandong has increased the margin of supply and demand. The methanol market is expected to fluctuate slightly and strongly, and the upward space may be limited. If geopolitics eases, high prices will face pressure.