The fluctuation range of methanol increases gradually
Since December 2018, methanol has been in a continuous oscillation state, especially since January this year, it has maintained a narrow oscillation at 2400-2600 yuan/ton, which is mainly due to the high inventory reality and preferential supply and demand expectations. Since last week, due to delayed production of new methanol capacity and expectations of spring maintenance, the futures price of methanol has risen by 100 yuan/ton. Last Tuesday, it closed at more than 2680 yuan/ton, and bulls'sentiment has risen sharply. However, due to the slowdown of the pace of de-inventory, the futures price fell back to 2560 yuan/ton on Thursday. Overall, the anticipated and realistic "saw-saw battle" enlarged the fluctuation range of methanol.
Inventory inflection point begins to appear
At present, the methanol port inventory is at a historic high. Wind data show that as of March 7, methanol stocks at ports in East and South China stood at 830.5 million tons, much higher than the same period in previous years. However, according to Zhuo Chuang's statistics, as of March 8, methanol stocks in Northwest Port have declined for two consecutive weeks. Jiutai Energy's trial run stocks in mid-March will further accelerate the pace of depot and bidding at the port. Meanwhile, methanol in Northwest and East China is in a split state, which will also reduce the port's inventory pressure. In addition, the northwest region has strong tender sentiment, the latest offer has been more than 2250 yuan/ton, the northwest to East China shipping window is closed, inventory expectations have gradually changed from accumulating to de-stocking, inventory inflection point appears. However, we believe that it is very difficult to see a significant decline in inventory before mid-April due to the actual depot schedule or delayed due to the unpredictable arrival of overseas ships and equipment overhaul.
Uncertainty in Spring Inspection
With the coming of spring inspection season, the recent market focus is on the maintenance of methanol plants, and supply is gradually tightened. In 2017 and 2018, the loss rate of production capacity caused by plant overhaul is 10% and 15%, respectively. It is expected that the loss rate of production capacity in spring inspection will remain above 10%. According to historical data, the price of methanol rose in spring of 2013 - 2018, which was driven by the decline of operating rate and lasted for about 45 days, with an average increase of about 15%. According to the statistics of public information disclosure, about 13 million tons of production capacity will be carried out for spring inspection this year (some units such as CNOOC will undergo short-term overhaul, the actual impact is less than that disclosed), and the start-up rate of methanol plant is expected to enter mid-March or continue to decline until May. However, judging from our actual investigation, the spring inspection plan is still under discussion, and there is greater uncertainty in the actual implementation, so it is not appropriate to over-hype.
Outlook for the future
From the end of last year to the end of February this year, methanol has been under the pressure of sluggish demand and high inventory, and has significantly stagnated in other varieties. The price of methanol oscillates between 2300 and 2600 yuan/ton. After March, the anticipation of the spring inspection of the plant and the new production capacity of downstream MTO boosted market sentiment. Methanol rose rapidly at one time, but the pressure of high inventory has not been eased. There are uncertainties in the realization of good supply and demand expectations. Recently, the market mentality is chaotic, and prices may fall into interval oscillation again. At the same time, due to the high overall inventory of commodities, especially liquid chemicals, and the risk of global macro-expectation downward in the peripheral market, methanol still needs to take precautions against systemic risk if the price of commodities, especially crude oil, falls.