Europe and AmericaLNGOr overflow to Asia, which is not conducive to the rebound of methanol

by2022year10month27Day, methanol main contractMA2301Continuing decline, closing2536element/Tons, down month on month from last Thursday163element/Tons, with a decrease of6%As shown in the following figure. The logistics in the spot market in the northwest region of China are not smooth, resulting in market arrivals being hindered; As downstream markets show resistance to high prices, market trading is gradually cooling down. Some production enterprises and intermediaries continue to adopt price reduction and profit sharing measures to promote shipments; Downstream demand is poor and cost pressure is high, continuing the on-demand procurement rhythm, and the domestic methanol market continues to be weak.chart1. Recent methanolfuturesPrice trendSource: Master BoyiDuring the major conference, the epidemic situation in the main production areas of the Daqin Line was severe due to the maintenance of the line. The tense situation of coal supply did not significantly improve, and coal prices remained high and fluctuated strongly due to the tight market coal resources. However, the epidemic situation in Inner Mongolia and other production areas is more severe, and freight rates remain high due to poor logistics transportation. The pressure on inventory in production areas has increased, and the trend of methanol prices is weak. Coal to methanol profits have once again fallen significantly, limiting the elasticity of supply recovery. The overall operating rate of methanol plants nationwide is73%, decreased compared to last week0.6%, slightly higher year-on-year; Coal to methanol operating rate76.9%, decreased compared to last week0.7%, slightly higher year-on-year; Operating rate of natural gas to methanol production60%, unchanged from last week, slightly higher than the same period last year; Operating rate of methanol production from coke oven gas63%, decreased compared to last week0.5%, slightly higher year-on-year; As shown in the following figure. The profit from natural gas to methanol continues to rise compared to the previous period, but some coke oven gas to methanol units in Shanxi have begun to implement production restriction measures due to safety and environmental impact.chart2. Domestic methanol production in China（%）

Source: Tonghua ShunThis week, with the decline in methanol prices at ports, import profits have slightly declined compared to last week. However, low inventory at ports has led to relatively strong port prices, and import profits remain in a positive range. This week, port inventories continued to decline, and methanol inventories of mainland enterprises continued to rebound. As of10month21Daily, domestic methanol port inventory52.5（-11.2）10000 tons, including inventory at Jiangsu port32.6（-4.3）10000 tons, inventory at Zhejiang port8.4（-3.2）10000 tons, methanol inventory in Guangdong region7.9（-2.26）10000 tons, methanol inventory in Fujian region1.57（-1.46）Ten thousand tons, as shown in the following figure. Average daily pickup volume of Taicang this week3322-4770Tons, this week the port inventory continues to decrease significantly, and low inventory stimulates downstream delivery willingness. The port inventory has significantly declined. On the one hand, the slow impact of unloading caused by sea closures has continued, and on the other hand, the significant maintenance of peripheral markets in the early stage has led to a reduction in the import end. However, mainland inventory continues to rise significantly, mainly due to the weak performance of traditional demand combined with the rebound in supply sideMTOEnterprise raw material inventory continues to decline, and terminal demand remains weak.chart3. Methanol inventory situation in Chinese ports

Source: Tonghua ShunAt present, most of the traditional downstream profits of methanol in China remain low, which is mainly affected by the weakening macro-economy and the repeated COVID-19 in various regions. In the current weak economic environment,MTOThe majority of downstream theoretical losses in factory production are significant, approaching last year's lowest level in terms of magnitude, and negative feedback has already emerged. to10month20Daily, domestic methanol to olefin production capacity utilization rate81.01%, month on month increase0.15%As shown in the following figure. Although a certain unit in Zhejiang shut down and the Datang unit slightly reduced its load during the week, the restart of the Shenghong unit in Jiangsu and the increase in load from Hengyou Energy resulted in a slight increase in the overall capacity utilization rate of methanol to olefins this week compared to last week. At present, the production profit of traditional downstream demand has rebounded significantly after the holiday, mainly due to the passive follow-up of the rise in methanol in the downstream. Based on cost support, formaldehyde factories have reported an increase in prices, and there is a strong demand for replenishment in the downstream. The market trading atmosphere is good, and the formaldehyde industry has abundant supply. Sellers still intend to actively ship, and prices in some regions are gradually falling rationally. The profit of dimethyl ether has improved;MTBEDownstream profits such as glacial acetic acid are still relatively poor;DMFProfits have also continued to weaken.chart4. our countryMTOStart of construction（%）Situation

Source: Tonghua ShunLooking at the recent increase in production capacity in mainland China, it has brought certain pressure, and under the impact of the epidemic, mainland shipments are not smooth, leading to a significant accumulation of inventory pressure from manufacturers. Inner Mongolia Jiutai20010000 tons/The methanol plant has already produced products, but due to the downstream ethylene glycol plant not yet operating, it is expected that the methanol supply increment will increase in the near future. Overall, the strong cost and low inventory in the current methanol market support strong methanol prices, while weak demand and downstream negative feedback suppress methanol prices. Although methanol futures have fallen significantly, there are still hidden dangers in the natural gas markets of Europe and America, which cannot be digested by European portsLNGThe ship may turn around to supply Asia, and if other fundamentals do not show significant positive results, the rebound of methanol will also be constrained by this. However, alcohol to olefins(MTO)The poor performance of the company has been ongoing for a long time, and relevant companies should have time to respond. In the medium term, they can consider going longMTOProfit, i.e. morePPorL, emptyMAThe opportunity.

Risk factors:crude oilThe price has dropped significantly, resulting in unexpected positive demand for methanol and non olefins.