Since late March, good news such as the commissioning of 600,000 tons/year MTO plant in Inner Mongolia, spring overhaul and phased replenishment of some downstream enterprises in Jiutai have been gradually exhausted. In addition, the MA market has continued to weaken, and the mentality of some operators has turned weak. In the absence of obvious positive factors, the market rally temporarily came to an end. From last Friday to now, southern Shandong has fallen 110 yuan/ton, northern Shandong 90 yuan/ton, Shanxi 80 yuan/ton, Taicang 50 yuan/ton and Guanzhong Shaanxi 110 yuan/ton.

We believe that the market downturn is reasonable. In recent years, the policy of supply-side reform and environmental safety inspection has been implemented step by step. The utilization rate of methanol and related enterprises has been effectively improved. The regional supply and demand structure has been gradually optimized. Industrial profits have been allocated reasonably in stages. The first quarter is mostly the profit cycle of upstream enterprises, while the profits of upstream enterprises have gradually returned in the second quarter, and the profit space of downstream enterprises has gradually increased. At present, industrial profits are shifting downstream. In the first quarter of this year, the profit margins of upstream enterprises are more than 100-700 yuan/ton, while downstream enterprises are only 10-600 yuan/ton. But since April, upstream profits have shrunk, ranging from 50-150 yuan/ton. Downstream profits are gradually rising. The methanol industry is carrying out reasonable “macro-control”, which conforms to the “natural law” of many years.

Is the market really “horrible”? Is short-selling really risky? We believe that this is not the case.

It is noteworthy that both the outside and the inland arbitrage windows are closed at present. Although it is known that Queen I is ready to ship from the Middle East to China, it is expected to arrive in about 25-30 days, and the port inventory has been reduced for three consecutive weeks. Assuming that no sudden factors occur in the short term, China’s market will enter the stage of regional consumption. At that time, the supply of goods in Western China will be outsourced or restricted, and the price will be expected to decline. Supply in the central and eastern regions is tightening and the market is rising until arbitrage is reopened and prices stop falling and rebound.

In the main production area of Northwest China, it is reported that 600,000 tons/year MTO plant in Jiutai Inner Mongolia is scheduled to resume from the end of April to the beginning of May, and its supporting 1 million tons/year methanol plant products will stop exporting. In addition, there is also the expectation of local and surrounding sources of goods, and supply in the Northwest is tightening again. Bohai Rim Transit Zone: Dalian Hengli’s new 820,000 tons/year MTBE plant is expected to be put into operation by the end of April. Although the preliminary plan is to start half-load temporarily, it is conducive to diluting methanol supply around the Bohai Rim and even forming favorable support for Northern Jiangsu and other areas. In addition, Luxi Group plans to build 300,000 tons/year MTO plant in April-May, and its 800,000 tons/year methanol plant products will be fully self-used, benefiting Shandong, Shanxi, Hebei and Northern Jiangsu. In East China, it is reported that Nanjing Chengzhi’s new 600,000 tons/year MTO plant is scheduled to be put into operation at the end of the second quarter, which will further increase the demand for methanol at the port, stimulate the circulation of cargo sources in Guanzhong, Shaanxi Province, and thus boost the market.

If the above benefits are superimposed, it does not exclude the possibility of boosting the mindset of most businesses. Of course, there are certain risks in the market, such as the restart of repair facilities such as New Austria, the increase of import sources such as Iran, and the one-month environmental protection inspection in Shandong Province, etc. Even including macro-weak adjustment, the linkage effect of chemical products and the expected return of crude oil. Therefore, we believe that from late April to early May, China’s methanol market does not rule out the possibility of a wave of rebound, followed by a downward slide.