Methanol is expected to maintain an oscillating trend against the backdrop of long-short divergence
2023/6/9
Long and short divergence stalemate
Recently, as the U.S. government debt crisis temporarily receded, coupled with the approach of the peak season of coal consumption in the domestic summer, coal consumption is expected to warm up to boost the stabilization of coal futures prices rebound. Under the resonance of the expected improvement in macroscopic surface and cost support factors, domestic methanol futures 2309 contract also showed an oscillating stabilization trend, with the futures price maintained in the range of 2000-2100 yuan/ton.
To sum up, after the elimination of the negative macro-side risks, the short-term need to pay attention to the results of the Fed's interest rate meeting in June. In the context of the peak domestic summer coal consumption season is approaching, coal consumption is expected to heat up to drive coal futures prices to stop rebounding and rebound significantly. Under the resonance of the expected improvement in the macro side and the highlighting of cost support factors, the biased factors rebounded to hedge the weak supply and demand fundamentals of methanol. Against the background of long-short divergence, methanol futures 2309 contract is expected to maintain an oscillating finishing trend in the aftermarket.
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From the perspective of capital, the net short position in the top 20 seats of methanol futures 2309 contract shrank significantly by more than one-third last week, and against the background of temporary balance between long and short forces, methanol futures prices are expected to oscillate in the future.
Macro risks were released and futures prices were repaired
After difficult negotiations, the U.S. Republican and Democratic parties finally reached an agreement on the debt ceiling extension at the last minute at the end of May, and the risk of U.S. debt default was temporarily lifted. The previous bearish macro atmosphere dissipated and the weakening of the systemic crisis made the risk appetite in the commodity futures market rebound, and methanol futures prices repaired and stabilized slightly.
Although the "fuse" that triggered the systemic crisis was temporarily extinguished, but over the past year, the high interest rate environment brought about by the continued interest rate hikes by the central banks of Europe and the United States has not yet turned around, resulting in a deepening recession in the European and American economies. It is not difficult to find, Europe and the United States economic recession is still expected to curb the biggest unfavorable factors of commodity demand rebound, coupled with the June Federal Reserve interest rate meeting is approaching again, the peripheral macroeconomic negative factors are still in place, which for the market methanol futures prices continue to rally to form a certain negative pressure.
With the domestic coal futures prices slowing down, coal spot prices in Shanxi and Shaanxi and other places downward space is limited. As domestic methanol is mainly made of coal, the process accounts for about 70%, so in the context of coal futures and spot prices to stop falling and stabilize, the domestic methanol futures main contract is supported by the cost logic to enhance the rebound.
Coal prices gradually stabilized and cost support was enhanced
According to statistics, since June, the domestic coking coal futures 2309 contract rebounded by 2.70% and coke futures rebounded by 5.92%. Based on the short-term coal futures price stabilization and rebound helps to enhance the cost support effect of coal-based methanol, the methanol futures price is expected to maintain oscillating and strong trend in the future.
For China's methanol industry, in the past 10 years, March-May every year is the period of concentrated maintenance of methanol enterprises' production units. With the peak season of spring overhaul, domestic methanol plants are now ushering in the resumption of production. Data show that as of the week of June 9, the average domestic methanol start-up rate was maintained at 69.11%, up slightly by 1.11 percentage points week-on-week and down slightly by 3.63 percentage points quarter-on-quarter. As a result, China's weekly methanol output increased slightly by 1.9 million tons to 1.551.5 million tons. In addition, in terms of new production capacity, the new domestic methanol production capacity in the third quarter involved six enterprises with a combined capacity size of 2.52 million tons.
Overall, with the end of the maintenance of the domestic stock methanol plant and the gradual launch of new production capacity, the domestic methanol supply pressure is expected to pick up.
Domestic supply pressure rises, downstream demand turns weak
As of early June, the profit of domestic methanol-to-olefin futures was 796 yuan/ton, a significant recovery of 436 yuan/ton. However, with the arrival of the southern rainy season and the traditional low season of demand such as summer, the downstream start-up rate is expected to fall back to a high level. According to statistics, as of the week of June 9, the domestic formaldehyde start rate was maintained at 30.08%, down slightly by 1.36 percentage points week-on-week. Meanwhile, Dimethyl Ether starts at 21.66%, flat week-on-week. Acetic acid start rate was maintained at 85.64%, down 9.22 percentage points week-on-week. Comparing with the trend of previous years, the formaldehyde start rate may tend to fall in the coming month or so. At the same time, dimethyl ether, acetic acid and MTBE start rate is also at a high level, and the space for further improvement is limited in the later stage, but the pressure to fall back is greater. Methanol downstream demand is expected to face the risk of weakening in the future.
