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Can methanol prices continue to rebound?
2023/6/28
In the past two days, coal chemical varieties collectively upward. Yesterday, methanol followed the collective rise of coal chemical industry and performed more strongly. Methanol futures stabilized near the 20-day average, the plate increased positions on the upside, the center of gravity rose steadily, filling the previous gap, breaking through the 2,100 yuan/ton barrier and touching a maximum of 2,105 yuan/ton.
In this regard, the Founder of the Shanghai branch of the Futures Research Institute, said Xia Congcong, methanol futures since June showed a low finishing trend, despite the recent rise in the plate, but has not yet broken the oscillation pattern between the range, belongs to the normal fluctuations in the market.
According to Xia Congcong, during the Dragon Boat Festival holiday, the market risk factors accumulated, the international oil prices plunged, the market is generally expected after the holiday domestic commodity market opened low, 26 methanol futures jumped low, in line with market forecasts. Methanol fundamentals have not changed significantly, after the release of market risk aversion, futures prices gradually stopped rebounding, sentiment on the plate disturbance increased.
In the interview, the reporter learned that the recent rebound with the price of coal, coal chemical varieties have gotten rid of the declining trend. At present, the mainstream coal mine shipments smoothly, the downstream replenishment increased, driving the coal market trading atmosphere improved. Coal prices rose slightly, the coal chemical cost side stabilized and rebounded, and there is some support for the raw material side.
"At present, entering the peak season of coal consumption, coal still has the possibility of continuing to oscillate and rebound, then coal chemical industry after a long period of oscillation in the low-price area, there is also the need for valuation repair." In Qisheng futures analyst Peng Sen Yu's view, some varieties of the previous decline and fundamentals are still acceptable will rebound upward one after another. For methanol, the linkage trend is certain, but the improvement of their own fundamentals is also a more important factor.
"From the perspective of the fundamentals of methanol, as prices continue to be low, the mainland methanol plant generally serious losses, starting continuous decline, the current device start rate near 65%, has been approaching the 2020 level, the supply is continuing to shrink the trend, and there is a further reduction may." Peng Sen Yu said yesterday, and the news of Venezuela methanol plant shutdown due to an accident, has now affected the loading, part of the established shipments to China is currently unable to load shipments normally, thus improving the expectations of a significant increase in imports in July.
In this regard, Dai Yifan, director of energy and chemical of South China Futures, also explained that there are some signals of improvement in supply and demand for methanol in the ring recently, mainly because of the slow loading of ships in Iran recently, and the import in July is expected to shrink, while there are several sets of MTOs with the possibility of driving in the future. In addition, due to the large drop in methanol prices in the early part of the period, some natural gas-based methanol units have load shedding expectations, which also formed some support, ultimately leading to a relatively strong short-term willingness of the market to more than match.
"Although the level of non-Iranian shipments is high, maintaining 600,000-70 million tons, but Iranian shipments in June decreased to 440,000 tons from 700,000 tons in May, and the overall import expectation in June decreased from 1.3 million tons to 1.0-1.1 million tons, and the import pressure has been significantly reduced. " CITIC Capital Futures energy and chemical analyst Liu Shuyuan said.
The reporter learned that domestic methanol producers are still suffering serious losses, and the start-ups have dropped sharply.
In this regard, Xia Congcong said, since this year, the methanol industry start-up has always been low, the supply pressure is still available, while the demand side is relatively sluggish. As methanol prices fell to a relatively low level, the industry chain downstream product profit repair, part of the parking device restart increased, just demand for methanol has improved. "However, it is currently in the off-season of demand, and the space for methanol demand to improve will be limited. In addition, the inflow of imported sources increased, and the methanol market stepped into a slow accumulation phase. Methanol market pressure gradually emerged, and the rise in futures prices may not be sustainable." She stated.
"With the further decline in methanol enterprise starts, there is the possibility of continued reduction in supply, and relative to the weak demand, if there is even less supply, the same possibility of upward movement in the market exists." Peng Sen Yu believes that at this stage, methanol is likely to go an oversold after the valuation repair market, whether the rise in the market has sustainability, but also depends on the fundamental guidance at that time. In his view, the imbalance between supply and demand in the market and the sustainability of this imbalance will be the key to determine the trend of methanol later.
"For methanol, the focus of attention in the late stage remains the opening and closing of the MTO plant." Peng Sen Yu said, at present, a MTO device in Zhejiang has stopped production, the previous expectation is to stop production for 2-3 weeks, to see if this device will restart as scheduled. Lianyungang MTO device also exists in July-August restart the possibility of driving, and now the real situation is unknown. In addition, the new MTO plant in Ningxia area, according to the previous forecast, there is a possibility of commissioning in July. As the above three sets of MTO units can affect 5.7 million tons/year of methanol demand, their opening and stopping become the focus and key of attention in the market afterwards. In addition, the methanol market also needs to pay attention to the changes in the cost side and the state of accumulated storage in the coastal market later.
"In terms of the methanol after-market, due to the global olefin monomer surplus suppression, in the context of lower MTO profits, the ceiling of methanol is still relatively clear, while the coal end also continues to be unpromising in the long cycle, in the context of the upper and lower margins are weak, the probability of a sustained and substantial rebound in methanol is relatively small." Dai Yifan said. In his view, focus on the late MTO restart of the realization of the situation, the scale of the import shrinkage and the change of coal. If imports do continue to shrink and MTOs cash in on restarts, then the balance sheet for coastal methanol will shift back to de-stocking and the strong bias may continue. Conversely, if MTO fails to deliver and coal continues to plunge, then methanol is used as a substitute for power coal and may still remain weak on valuation.
For the aftermarket, Liu Shuyuan added that from the point of view of economics and common sense, the coastal MTO units will probably not keep stopping, and the low methanol prices also make it more likely that MTO will restart to cash in, and the demand side of methanol may turn marginal in the future, and the probability of further rebound in methanol futures prices is higher.
In Xia Congcong's view, after more than four months of continuous adjustment, methanol futures are in a finishing position, and in the absence of obvious directional guidance, the futures price is likely to continue the range oscillation trend.
In this regard, the Founder of the Shanghai branch of the Futures Research Institute, said Xia Congcong, methanol futures since June showed a low finishing trend, despite the recent rise in the plate, but has not yet broken the oscillation pattern between the range, belongs to the normal fluctuations in the market.
According to Xia Congcong, during the Dragon Boat Festival holiday, the market risk factors accumulated, the international oil prices plunged, the market is generally expected after the holiday domestic commodity market opened low, 26 methanol futures jumped low, in line with market forecasts. Methanol fundamentals have not changed significantly, after the release of market risk aversion, futures prices gradually stopped rebounding, sentiment on the plate disturbance increased.
In the interview, the reporter learned that the recent rebound with the price of coal, coal chemical varieties have gotten rid of the declining trend. At present, the mainstream coal mine shipments smoothly, the downstream replenishment increased, driving the coal market trading atmosphere improved. Coal prices rose slightly, the coal chemical cost side stabilized and rebounded, and there is some support for the raw material side.
"At present, entering the peak season of coal consumption, coal still has the possibility of continuing to oscillate and rebound, then coal chemical industry after a long period of oscillation in the low-price area, there is also the need for valuation repair." In Qisheng futures analyst Peng Sen Yu's view, some varieties of the previous decline and fundamentals are still acceptable will rebound upward one after another. For methanol, the linkage trend is certain, but the improvement of their own fundamentals is also a more important factor.
"From the perspective of the fundamentals of methanol, as prices continue to be low, the mainland methanol plant generally serious losses, starting continuous decline, the current device start rate near 65%, has been approaching the 2020 level, the supply is continuing to shrink the trend, and there is a further reduction may." Peng Sen Yu said yesterday, and the news of Venezuela methanol plant shutdown due to an accident, has now affected the loading, part of the established shipments to China is currently unable to load shipments normally, thus improving the expectations of a significant increase in imports in July.
In this regard, Dai Yifan, director of energy and chemical of South China Futures, also explained that there are some signals of improvement in supply and demand for methanol in the ring recently, mainly because of the slow loading of ships in Iran recently, and the import in July is expected to shrink, while there are several sets of MTOs with the possibility of driving in the future. In addition, due to the large drop in methanol prices in the early part of the period, some natural gas-based methanol units have load shedding expectations, which also formed some support, ultimately leading to a relatively strong short-term willingness of the market to more than match.
"Although the level of non-Iranian shipments is high, maintaining 600,000-70 million tons, but Iranian shipments in June decreased to 440,000 tons from 700,000 tons in May, and the overall import expectation in June decreased from 1.3 million tons to 1.0-1.1 million tons, and the import pressure has been significantly reduced. " CITIC Capital Futures energy and chemical analyst Liu Shuyuan said.
The reporter learned that domestic methanol producers are still suffering serious losses, and the start-ups have dropped sharply.
In this regard, Xia Congcong said, since this year, the methanol industry start-up has always been low, the supply pressure is still available, while the demand side is relatively sluggish. As methanol prices fell to a relatively low level, the industry chain downstream product profit repair, part of the parking device restart increased, just demand for methanol has improved. "However, it is currently in the off-season of demand, and the space for methanol demand to improve will be limited. In addition, the inflow of imported sources increased, and the methanol market stepped into a slow accumulation phase. Methanol market pressure gradually emerged, and the rise in futures prices may not be sustainable." She stated.
"With the further decline in methanol enterprise starts, there is the possibility of continued reduction in supply, and relative to the weak demand, if there is even less supply, the same possibility of upward movement in the market exists." Peng Sen Yu believes that at this stage, methanol is likely to go an oversold after the valuation repair market, whether the rise in the market has sustainability, but also depends on the fundamental guidance at that time. In his view, the imbalance between supply and demand in the market and the sustainability of this imbalance will be the key to determine the trend of methanol later.
"For methanol, the focus of attention in the late stage remains the opening and closing of the MTO plant." Peng Sen Yu said, at present, a MTO device in Zhejiang has stopped production, the previous expectation is to stop production for 2-3 weeks, to see if this device will restart as scheduled. Lianyungang MTO device also exists in July-August restart the possibility of driving, and now the real situation is unknown. In addition, the new MTO plant in Ningxia area, according to the previous forecast, there is a possibility of commissioning in July. As the above three sets of MTO units can affect 5.7 million tons/year of methanol demand, their opening and stopping become the focus and key of attention in the market afterwards. In addition, the methanol market also needs to pay attention to the changes in the cost side and the state of accumulated storage in the coastal market later.
"In terms of the methanol after-market, due to the global olefin monomer surplus suppression, in the context of lower MTO profits, the ceiling of methanol is still relatively clear, while the coal end also continues to be unpromising in the long cycle, in the context of the upper and lower margins are weak, the probability of a sustained and substantial rebound in methanol is relatively small." Dai Yifan said. In his view, focus on the late MTO restart of the realization of the situation, the scale of the import shrinkage and the change of coal. If imports do continue to shrink and MTOs cash in on restarts, then the balance sheet for coastal methanol will shift back to de-stocking and the strong bias may continue. Conversely, if MTO fails to deliver and coal continues to plunge, then methanol is used as a substitute for power coal and may still remain weak on valuation.
For the aftermarket, Liu Shuyuan added that from the point of view of economics and common sense, the coastal MTO units will probably not keep stopping, and the low methanol prices also make it more likely that MTO will restart to cash in, and the demand side of methanol may turn marginal in the future, and the probability of further rebound in methanol futures prices is higher.
In Xia Congcong's view, after more than four months of continuous adjustment, methanol futures are in a finishing position, and in the absence of obvious directional guidance, the futures price is likely to continue the range oscillation trend.
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