Methanol Fundamentals Lack Favorable Factors Supporting Methanol_Sina

Daily Futures

last week,MethanolThe overall price showed a “V” shaped trend. The price dropped back at the beginning of the week and rebounded at the end of the week. However, after solving the fundamentals of methanol, the author believes that the fundamentals of methanol lacks an upward driving force in December, and the current MTO profit is still a big loss. It is expected that the driving force for the price continues to rise not strongly.

  The likelihood of a supply-side decline is small

Recently, coal-to-methanol profit has been greatly restored from -850 yuan / ton to -500 yuan / ton. Last week, domestic coal-to-methanol production increased from 69.3% to 70.79%. Given that methanol manufacturers are generally reluctant to stop their vehicles in winter, and the gas restriction in Southwest China will start in early December this year, it is expected that domestic methanol production will remain around 70% before the gas restriction. At the same time, Ningxia Kunpeng has not produced products yet. If it can be produced normally in the near future, it will increase its new supply by about 30,000 tons in December. In addition, Ningxia Baofeng may delay the start of production until 2023.

In terms of imports, the port was closed again due to the weather last week, resulting in a slow unloading speed of methanol. It is expected that some November cargoes will be delayed to unload in December. In addition, with the recent restart of Bushehr and kaveh units, construction starts in November have increased compared to October Currently, December methanol imports are expected to increase month-on-month. Overall, although the start of domestic methanol production in December may drop sharply due to the impact of gas restrictions in the southwest region, imports are expected to increase in December, and Ningxia Kunpeng may release production. Therefore, it is expected that the likelihood of a sharp drop in methanol supply in December will be small.

  It is difficult to get a significant increase on the demand side

Regarding MTO, it is heard that the inspection of Ningbo Funde has been postponed until 28 November, and whether Yangmei Hengtong will be inspected is still waiting for the results of the negotiation. At the moment, although MTO’s profit has been slightly restored, it is still suffering a big loss. It is expected that the MTO equipment that was shut down in the early stage is less likely to resume production in the near future. In addition, the commissioning of Shenghong Refining and Chemicals needs close attention. If the 1.1 million tons of ethylene can be operated stably, it will weaken the demand for some of Shenghong’s external methanol production. If the overhaul of Ningbo Funde, Yangmei Hengtong and the commissioning of Shenghong Refining & Chemical can be achieved in the near future, even if the closed MTO units can be restarted in the early stage in December, it is difficult to see significant progress in the demand for MTO in December.

On the traditional downstream side, downstream methanol starts increased slightly last week. Among them, the initiation of formaldehyde increased from 30.67% to 31.56%, the initiation of acetic acid increased from 73.68% to 75.23%, the initiation of MTBE increased from 50.91% to 51.53%, and the initiation of acetic acid increased with the increase of dimethyl ether from 11.55% to 11.73 %. Given that December will enter the off-season demand season as temperatures drop, it will be difficult for traditional downstream construction to ramp up significantly at that time.

  Port inventories are building up

During the first three weeks of November, methanol inventories at ports accumulated at low levels for a period. Last week, methanol inventory at the port fell sharply by 55,100 tonnes to 512,000 tonnes, mainly due to the reduction in unloading due to the port closure. Given the expected increase in methanol imports in December and the possibility of an overhaul at Ningbo Fude, it is expected that it will be difficult to reduce port inventory in December. Recently, the list of methanol manufacturers on the mainland has continued to accumulate to a relatively high level over the years Given that domestic production is likely to remain high before the gas restriction, and the demand side is unlikely of improving significantly in the short term, it is expected that methanol may continue to accumulate in ports in the market outlook.

Overall, although the fundamental difference of methanol has been greatly underestimated by 300 yuan / ton, given that the overall supply and demand situation in December has not varied much, it is expected that the price of methanol will continue to rise. In terms of operation, it is not recommended to pursue high, and we need to pay attention to the commissioning of Shenghong Refinery and Chemical, the start of MTO equipment, and the situation of gas restrictions at home and abroad.(Author unit: Daddy Futures)

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