Source: Futures Daily
At present, the fundamentals of supply and demand are intertwined.MethanolThe driving force for the rise is obviously insufficient. However, from a macro perspective, with the further optimization of domestic epidemic prevention and control measures and the promotion of positive expectations, there is a high probability that methanol will recover its valuation upwards.
After the methanol futures in October fell rapidly from the high level, the main contracts in November mainly continued to oscillate around the range of 2460-2650 yuan/ton. In December, under the background of low valuation and positive macro drivers, can methanol get out of the volatile market? This paper makes the following analysis.
Fundamentals long and short intertwined
Since the beginning of this year, although coal and natural gas prices have fluctuated to a certain extent, they have generally remained stable. However, due to weak downstream demand, methanol showed a weak oscillation trend, and production enterprises suffered overall losses. According to market data, since May, coal-to-methanol enterprises have started to suffer losses again, and the losses have continued to expand. On November 15, the largest pre-tax gross profit loss of coal-to-methanol reached 850 yuan/ton. Recently, although the loss has been reduced, the overall valuation of methanol is at a low level.
At the end of October, on the one hand, some natural gas-to-methanol units in Northwest China began to shut down for seasonal maintenance; on the other hand, due to the expansion of losses, coal-to-methanol units in Henan, Shandong and other places increased their load reduction and maintenance, and the overall operating rate of methanol dropped from a high level. . In the past two weeks, as the loss of coal-to-methanol units has decreased, the initial load reduction and maintenance companies have gradually resumed work, and the operating rate of coal-to-methanol has increased. However, in December, the operating rate of natural gas-to-methanol units will further decline due to seasonal maintenance plans. According to historical statistics, the operating rate of methanol from natural gas will drop to 20%-30% at the end of December. At present, the latest weekly operating rate is 46.33%, and there is still a large room for decline.
In November, due to the resumption of operation of some devices and the obstruction of shipments of some enterprises, the inventory of methanol enterprises continued to run at a high level. In November, the inventories of methanol in major coastal ports rose first and then fell, and the accumulation speed was significantly lower than expected. At the same time, the month-on-month decline in methanol imports in November also reduced the pressure on port inventories. Data show that methanol imports in November are estimated at 970,000 tons, a drop of 51,600 tons or 5.05% from the previous month. From the point of view of spot prices, in order to alleviate the pressure of increasing inventory, mainland production enterprises have continuously lowered their prices to promote shipments. The overall supply of goods in the port area is still tight, and the inventory is relatively low. During the month, many industry players are reluctant to sell at low prices.
MTO factories still have planned shutdowns
As an emerging downstream demand for methanol, methanol to olefins accounts for more than 50% of the total downstream demand for methanol. In the case of little change in other traditional downstream demand, changes in the operating rate of methanol-to-olefins units will largely reflect the downstream demand for methanol. According to market data, the operating rate of methanol to olefins rose from 72.98% in the week of October 27 to 76.76% in the week of November 24, an increase of 3.78%. Although the downstream demand is expected to be weak, the operating rate of the methanol-to-olefins unit has unexpectedly increased after the restart of the long-term shutdown unit. Considering their own profits in December, important coastal MTO factories still plan to shut down for maintenance, some MTO factories are still selling raw material methanol, and the overall demand is still weak.
Recently, with the further optimization of domestic epidemic prevention and control measures, the overall sentiment in the commodity market has recovered. In addition, the executive meeting of the State Council on November 22 made arrangements to stabilize the economy-a package of policies and subsequent measures were fully implemented and effective, consolidating the foundation for economic stabilization and upward growth. The next day, 16 “boots” of financial support for real estate were implemented, and the six major banks granted 17 real estate companies with an intentional credit line of 1,275 billion yuan. On November 25, the People’s Bank of China issued an announcement, deciding to reduce the deposit reserve ratio of financial institutions by 0.25 percentage points on December 5, 2022. The continuous introduction of various support policies and the preference of macro expectations have become the main driving force for the rise in methanol prices.
To sum up, the current fundamentals of supply and demand are intertwined, and the driving force for the rise of methanol is obviously insufficient. However, from a macro perspective, with the further optimization of domestic epidemic prevention and control measures and the promotion of positive expectations, there is a high probability that methanol will recover its valuation upwards. However, the market outlook needs to beware of negative risks such as a sharp drop in crude oil and increased concerns about global demand.
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