Price Trend

According to the data from the business associations’list, the overall domestic price of xylene remained around 5762 yuan/ton this week, with no obvious fluctuation.

II. Analytical Review

1. Upstream: For international crude oil, this week’s overall high oil price shocks, the average value continues to rise, oil prices are rising steadily, spot Brent 70.87-71.185 US dollars per barrel. The crude oil market remained at a high level and the xylene market was also at a high standstill.

2. The reference price of FOB Korean xylene is also stable, ranging from $721 to $726 per ton. This week, Sinopec’s Xylene listing price remained stable and unchanged.

3. Downstream: Xylene port stocks rose, East China stocks in about 128,000 tons. The supply side of the market remained stable, while the downstream demand was not good, so the volume was limited and the market trend of xylene was deadlocked.

3. Future Market Forecast

The Xylene Analyst of Business Society Chemical Branch thinks that in the near future, the Xylene plant of large factories has entered the overhaul period one after another, the output has decreased slightly, the international crude oil level has shocked, and the overall situation is relatively ideal; the Xylene market is deadlocked, although market participants have limited confidence in the future market, they do not look short, and it is expected that the price of Xylene will remain stable in the near future.

As crude oil prices rose to their highest level in nearly five months, Russia issued a “brake” signal to OPEC that it might consider increasing production after the expiration of the cut-off agreement in June 2019. According to Bloomberg, on April 9, Russian President Vladimir Putin said that although Russia will continue to cooperate with OPEC members, whether Russia will continue to reduce production after June this year will depend on market conditions.

No intention to fight “crude oil price war” with the United States

According to Reuters, Russian official Kirill Dmitriev said at a meeting on April 8 that the current decline in crude oil inventories may lead Russia to propose an increase in production at a meeting with OPEC members in June this year to stimulate market vitality.

“Russia and OPEC together to reduce production is to stabilize the market, for this purpose, production reduction, increase are our choice. Now the price of crude oil has stabilized and the stock of crude oil has declined. Now we have seen the possibility of increasing production after June. Even if production is increased, it does not mean the end of Russia’s cooperation with OPEC, but a reasonable continuation on the current basis. Kirill Dmitriev told Reuters in an interview.

Kirill Dmitriev, chief executive of RDIF, Russia’s sovereign wealth fund, has been an important supporter of OPEC+’s crude oil reduction agreement since 2016. In recent months, he also publicly expressed support for Saudi Arabia’s demand for production cuts, saying it was still too early to discuss stopping the cuts.

However, Russia’s attitude changed after crude oil prices rose above the $70 mark and said it was appropriate for Russia to reach that level. According to the Moscow Times, Kirill Dmitriev said in January that Russia should not wage a “crude oil price war” with the United States, but that it would still abide by the “OPEC+” cut-off agreement in the short term.

In fact, in the past year, Russian oil executives have repeatedly pressed supporters such as Russian Energy Minister Alexander Nowak to stop production cuts. Igor Sechin, a senior executive at Rosneft, a Russian oil company, has said that if Russia continues to cut production, it will cede its share of the global crude oil market to the United States.

Increased market uncertainty

In the face of Russia’s attitude change, the market reacted quickly. On April 9, crude oil prices fell slightly. Brent crude oil prices fell from $71.34 per barrel last week to $70.61 per barrel. WTI crude oil also fell from $64.79 to $63.98 per barrel.

According to the latest data released by market research institutes, “OPEC+” crude oil production in March this year has dropped 534,000 barrels per day to 3,000,000 barrels per day, and since the end of 2018, the price of Brent crude oil has risen by more than 30%.

In the face of price fluctuations, OPEC members such as Saudi Arabia and the United Arab Emirates have said they will not stop cutting production. On April 10, in response to Russia’s proposal, Emirates Energy Minister Mazrui said that Russia still needed to comply with the cut-off agreement and would not easily increase production without consultation with OPEC countries. “According to the agreement, in March, Russia, Iraq and other countries have expanded their output cuts to a certain extent, and the market may reach a balance between supply and demand by the end of 2019.

At the same time, there are also news that Saudi Arabia will maintain a large-scale production reduction, which reached 324,000 barrels per day in March, and its crude oil production has reached the expectations of its energy minister, Khalid Falkh, and dropped to less than 10 million barrels per day, slightly below 9.8 million barrels per day.

In Russia’s view, the reason why it began to consider increasing production is that uncertainties in the crude oil market are increasing. According to Bloomberg News, Putin said on April 9 that uncertainties in the crude oil market are increasing. Before making a final decision, Russia should take into account the needs of local oil and gas companies. Political turmoil in Venezuela, Iran and Libya, members of OPEC, is also a measure.

It is understood that Libya, which is confronted by two major political forces in the East and west, has again erupted violent clashes in the past week. The oil-rich southern region is under the control of military forces in the East this year. On April 9, NOC, Libya’s state-owned oil company, pointed out that the safety of the oil field is still being determined and that crude oil production may be affected. Meanwhile, sanctions imposed by the United States on Iran and Venezuela have not yet eased, which has also exacerbated the tense situation in the global crude oil market.

Putin said: “We believe that investment will come only in the case of continuous production, otherwise there will be a global energy crisis. In the future, Russia will pay close attention to the crude oil market with OPEC’s main allies, Saudi Arabia and Persian Gulf allies.

Oil prices rose 1% on Tuesday amid concerns about global supply constraints caused by the Libyan civil war, declining exports from Venezuela and Iran, but uncertainty about OPEC-led production cuts has limited oil price increases.

Brent crude oil futures closed up $0.54, or 0.76%, at $71.72 a barrel. U.S. crude oil futures rose $0.65, or 1%, to close at $64.05 a barrel.

In Libya, fighting between the Haftar-led Libyan National Army and the internationally recognized government has increased the likelihood of a decline in the country’s supply. Libya is a member of OPEC.

U.S. sanctions against Iran and Venezuela, the other two OPEC members, have led to a reduction in oil exports. According to tanker data and industry sources, Iran’s crude oil exports in April have fallen to the lowest level since then.

“Global supply is falling faster than people think. The imbalance between supply and demand in the market, “said Phil Flynn, an analyst at Price Futures Group.” The continued decline in Venezuela’s oil supply will have an impact, and OPEC production cuts will also play a role.

However, downward pressure has increased on Russia’s willingness to stick to OPEC-led production cuts and expectations of increased inventories in the United States.

Oil prices have risen by more than 30% this year, driven by agreements between OPEC and other oil producers, including Russia. The organization has been cutting production since January 1 and will decide in June whether to continue cutting production.

An official from Russian natural gas giant Gazprom said Tuesday that the global oil agreement signed by OPEC and its allies is expected to end in the first half of this year.

U.S. crude oil stocks are expected to increase by 1.7 million barrels last week, the fourth consecutive week of increase, also putting pressure on oil prices. Nevertheless, gasoline stocks have declined for nine consecutive weeks, with refining rates of less than 90% of total capacity since early February due to seasonal maintenance.

Weakening Supply and Geopolitical Warming

A Macroscopic Factor: Global Economic Growth Expectations are Downgraded Again, Money Tends to Ease

Global economic growth expectations were further downgraded. In the World Economic Outlook in April this year, the IMF again lowered its expectations for global economic growth. The IMF expects that the global economy will grow by 3.3% in 2019 and 3.6% in 2020. The growth rate in 2019 is 0.2 percentage points lower than that in January 2019, and the expectations for 2020 remain unchanged.

The upside-down of U.S. Treasury yields has once again raised economic concerns in the United States. In late March, the US treasury bond yields of March and 10-year maturities were upside down, and the short-term treasury bond yields were contrary to the long-term treasury bond yields. This is the first time since 2007. There is a “correlation” between the upside-down of treasury bond yields and economic recession, but there is no inevitable “causal relationship”. The upside-down of US tream bond yields does not necessarily mean that the US economy In addition, the “pigeon” signal of the Federal Reserve’s latest interest rate meeting is clear, suggesting that interest rates will not be raised this year, and that the contraction will end in September. In the context of the decline in US economic growth, monetary liquidity will gradually ease. In addition, according to the IMF’s forecast, GDP growth in the United States will fall to 2.3% this year, but the IMF raised its GDP growth forecast for 2020 by 0.1% to 1.9%.

The European economy is declining. EU forecasts show that the EU’s overall economic growth is expected to fall from 1.9% to 1.5% this year, from 1.8% to 1.7% next year, and from 1.3% to 1.6% this year and next year, respectively. Meanwhile, at the ECB’s monetary policy meeting in March, it adjusted the time point for interest rate hikes, saying that it would not raise interest rates until the end of 2019, which ended in the summer of 2019.

Global liquidity tends to be loose. This year, influenced by the downturn in global economic growth, the monetary policy of the multinational central banks has been easing. The United States will end the interest rate increase and contraction ahead of schedule. The European Central Bank will postpone the time point of interest rate increase. Some emerging economies have joined in the interest rate reduction tide, and the global monetary liquidity has generally tended to be relaxed. This means that the current global economic situation really worries countries and has to implement some measures in the monetary field. Measures to support the economy.

B Supply: Global supply continues to shrink and U.S. crude oil supply growth slows down

OPEC output continued to decline

OPEC’s major oil-producing countries are actively reducing production. As of March this year, OPEC crude oil production has dropped to 3.02 million barrels per day, a new low in the past four years. The implementation of production reduction in major oil producing countries has led to a significant decline in OPEC crude oil production. According to the implementation of production reduction in oil-producing countries, the implementation rate of production reduction in January, February and March this year reached 89%, 103% and 154%, respectively. Saudi Arabia and Kuwait, the major oil-producing countries, maintained a high implementation rate of production reduction. In addition, OPEC and non-OPEC oil-producing countries cancelled the April meeting and will meet in June to decide whether to extend the cut-off agreement. As Iran and Venezuela’s crude oil production declined passively, there are reports that there are differences within OPEC on whether to continue to reduce output in the second half of the year.

Saudi Arabia, the main producer of the reduction, exceeded expectations. Saudi Arabia, as the main force of production reduction, its share of output reduction reaches a quarter of the total output reduction. Therefore, the implementation of output reduction in Saudi Arabia plays a vital role in the final effect of production reduction. From January to March, Saudi Arabia’s output exceeded expectations. In March, its output fell by more than 500,000 barrels per day compared with the target of production reduction, and the implementation rate of production reduction reached 261%.

Venezuela’s output has been passively reduced. Venezuela’s crude oil production has fallen by more than 1 million barrels per day in the past two years due to the sanctions imposed by the United States and the domestic oil system. So far, there is no sign of a halt in the decline. In March, Venezuela’s output fell to 500,000 barrels per day due to the paralysis of its domestic power system. Meanwhile, in mid-March, Venezuela’s crude oil exports to the United States dropped to zero. Venezuela’s supply is expected to decline irreversibly in the short term.

Iranian crude oil exports fell further. Iran’s crude oil production and exports have continued to decline since the U.S. resumed sanctions against Iran in November. As of February this year, Iran’s crude oil production has fallen to 2743,000 barrels per day, the lowest level in the past five years. In addition, although the United States exempted major countries from importing Iranian crude oil, Iranian crude oil export data still showed a decline. Since November last year, Iran’s exports to Europe, South Korea and other places have dropped to zero. At present, only a few countries such as China and India are exporting, and the export volume is also gradually declining. In early May, the U.S. sanctions on Iran ushered in an important node, but the recent announcement of the U.S. regarding the Iranian Revolutionary Guard as a terrorist organization means that the possibility of continued exemption from U.S. sanctions on Iran is becoming increasingly low.

The US dominates non-OPEC supply, but upstream investment in shale oil continues to slow down

The United States dominates non-OPEC supply increments. According to statistics from the three major energy agencies, crude oil production in non-OPEC countries has increased by about 2 million barrels per day since 2019, mainly from the United States, which accounts for more than 80% of the increase, but overall the increase is less than that in 2018. As of April 5, the U.S. crude oil production reached 12.2 million barrels per day, a new record.

Upstream investment in shale oil in the United States has slowed down. The number of oil-active drilling rigs in the United States has declined in the past year or so, especially since the end of last year, the total number of oil-active drilling rigs in the United States has declined, falling to 824 in the same week as March 29, down 64 from the high at the end of last year, but the data in the last two weeks have recovered 17 from the low. According to the time lag of drilling rig oil price for about 4 months, drilling rig data may stop falling and rise again in the next 1-2 months. At the same time, we can see that in the data of seven major shale oil producing areas in the United States, unlike the sustained growth of inventory wells, the number of drilling wells has fallen in recent months, which is directly related to the decline in the number of drilling rigs. As the largest shale oil producing area in the United States, single well production in Permian Basin has been declining in recent years, which means that the efficiency of shale oil wells in this area is declining. At the same time, with the decline of production growth rate in the region, more drilling investment may be needed to maintain production in the future, which puts forward higher requirements for shale oil production costs. Shale oil enterprises may be committed to reducing production costs in the future.

Credit spreads of US high-yield debt are at the high level since 2017, and financing costs of shale oil companies are high. At present, the credit spreads of US high-yield bonds are at a high level since 2017. Shale oil companies are one of the main issuers, accounting for about 34% of the market. At the same time, the data is negatively correlated with oil prices. Since the beginning of this year, due to the rebound in oil prices, the data has dropped from 11% to about 9%, but it is still at a high level since 2007. The high credit spreads of US high-yield bonds mean that the cost of issuing bonds for shale oil enterprises is higher, which will further restrict the investment activities of shale oil enterprises upstream.

U.S. crude oil imports from Venezuela dropped to zero. The volume of crude oil imported by the United States from Venezuela accounts for 30-40% of Venezuela’s total crude oil exports. Since the United States imposed sanctions on Venezuela, the volume of crude oil imported by the United States from Venezuela has continued to decline. According to PDVSA data, the volume of crude oil imported by the United States dropped to zero in mid-March. Canada, Saudi Arabia, Mexico and other major sources of U.S. imports are reducing Venezuela’s volume. At the same time, crude oil imports may increase to other countries’crude oil imports. In addition, Venezuela’s refining operations in the United States account for 28 per cent, and it remains to be seen whether these refining capabilities will be affected if American refineries stop importing Venezuelan crude oil.

U.S. crude oil pipeline capacity will be released in the second half of this year. In 2018, inadequate pipeline capacity in North America led to the accumulation of regional crude oil stocks, and led to a sharp rise in WTI-Midland and WTI-WCS price spreads, but since then, with the increase of pipeline capacity, the current price spreads have returned to a reasonable level. However, this does not mean that crude oil pipeline capacity can meet the demand. According to OPEC statistics, the Permian crude oil production in the main shale oil producing areas of the United States has exceeded 3.7 million barrels per day, and exceeded the pipeline capacity of the area, which to some extent limits the growth of production in the region. According to the new pipeline plan of the United States, the new pipeline plan of the United States from 2019 to 2020 is expected to be 5.96 million barrels per day, and the new pipeline capacity from Permian to the Bay Area will reach 1.925 million barrels per day in 2019, most of which will be put into operation in the second half of this year, which also means that the inventory pressure of the Permian Basin will be eased in the second half of this year.

C Demand: Refining activities in the United States are gradually active, and future demand will increase in stages.

The economy is weakening and the growth rate of global crude oil demand is declining. It is obvious that the weakening economy of the major crude oil-demanding countries such as the world, China and the United States has an impact on demand. From historical data, the increase of global crude oil demand is positively correlated with global GDP and oil price, but there are some deviations between oil price and the high and low points of the former two. The global economy is likely to weaken further in the next two years, weakening overall in 2018, and the corresponding growth rate of global crude oil demand will also decline. EIA, IEA and OPEC forecast global crude oil demand growth of 1.4 million barrels per day, 1.4 million barrels per day and 1.21 million barrels per day in 2009, respectively.

The upside-down of U.S. bond yields has raised economic concerns and limited growth in U.S. crude oil demand. U.S. Treasury bond yields hang upside down, the economic outlook is worrying, and the increment of crude oil demand is limited. The IMF expects US GDP to fall to 2.3% in 2019 from 2.9% in 2018, and agencies’forecasts for US demand growth this year are also lower than in 2018. In addition, the recent upside-down of U.S. Treasury yields is considered a sign of economic recession, and the economic outlook is not optimistic. EIA, IEA and OPEC’s latest forecasts for U.S. crude oil demand growth in 2019 are 360,000 barrels per day, 290,000 barrels per day and 230,000 barrels per day, respectively.

US refinery imports enter the recovery channel, but terminal demand is divided. Since mid-February, refinery activity in the United States has been gradually active. Refinery start-up rate and crude oil processing volume have been rising, in order to prepare in advance in the peak season. Until early September, refinery imports in the United States will show seasonal growth, and will drive the degrading of crude oil stocks. The inventory report in late March was disturbed by a chemical tank fire in the Houston Channel of the United States. Refinery start-up rate declined, while crude oil stocks increased. But we believe that this is only a short-term disturbance. Refinery activity in the United States will continue to rebound in the second quarter. In addition, in recent years, the price gap of gasoline cracking in the United States has strengthened while that of diesel cracking has weakened substantially, which is mainly due to seasonal factors and the deviation of the price gap from the regression demand in the earlier period.

Price spreads: monthly spreads are stronger.

D. Contraction of price difference between European and American markets

Monthly difference: European and American crude oil monthly difference continues to strengthen

Since the beginning of this year, the monthly difference between European and American crude oil has strengthened as a whole. Brent crude oil has maintained backwardation structure for nearly two months. Recently, WTI crude oil C1-C12 has also changed from contango structure to backwardation structure, mainly affected by the continuous decline in U.S. stocks. WTI crude oil has performed better than Brent crude oil in recent months.

Regional Spread: Contraction of Spread in European and American Markets

In the first quarter, Brent-WTI crude oil price difference strengthened. The reason why Brent crude oil is stronger than WTI crude oil lies in the regional supply and demand situation. The continuous growth of domestic production in the United States and the accumulation of Cushing stocks have suppressed the trend of WTI crude oil, while the non-U.S. market is strong due to the reduction of production in oil producing countries. But since March, the price gap of Brent-WTI crude oil has shrunk due to the decline of output growth and the continuous de-stocking of WTI crude oil in the U.S. market. As far as the US is concerned, the price difference between WTI crude oil and other domestic markets has continued to strengthen recently, and the price difference between WTI-Midland, WTI-LLS and WTI-MEH has rebounded.

Pyrolysis Spread: Reasonable Regression Range of Gasoline and Diesel Oil Pyrolysis Spread

In the first quarter, the trend of gasoline and diesel cracking price difference in Europe and the United States was divided. Before March, the situation showed that the gasoline cracking price difference was weak and the diesel cracking price difference was strong. But in March, the gasoline cracking price difference became stronger and the diesel cracking price difference began to weaken. With the warming of the weather, the heating demand gradually ended, while the gasoline demand returned after seasonal factors and the earlier price difference deviated. It is hoped that it will gradually recover and further support the strengthening of gasoline cracking profits and the weakening of diesel cracking profits.

E-fund position: fund multi-space ratio rebounded

Since the beginning of this year, the net long positions of large speculators in crude oil futures have increased continuously, and the ratio of short positions has continued to rise. The net long positions of the five major oil funds have reached a new high since November last year. The growth of long positions and the decline of short positions mean that the market remains bullish. But at the same time, we also see the growth of short positions on Brent crude oil. With the rising focus of oil prices, the gradual entry of spot positions will be the greatest resistance to oil prices.

The impact of global economic weakening on crude oil demand level and the suppression of market investment sentiment will run through the first half of the year. Logically, demand determines the long-term fluctuation range of oil prices, while the dominant factor of medium-term and short-term fluctuations is still supply.

The implementation of the first-quarter reduction agreement, the passive reduction of production in Venezuela and Iran, and the slowdown of upstream investment in American shale oil have tightened the supply side. The second-quarter reduction alliance will decide the future direction of the reduction agreement. Meanwhile, the sanctions imposed by the United States on Iran are at an important juncture. Whether the sanctions will continue to be relaxed after the expiration of the exemption in early May is still uncertain, while the upstream investment in American shale oil has slowed down. Obviously, the growth rate of output has further declined. From the consumer side, refinery activities in North America will gradually be active in the second quarter, refinery oil imports will increase seasonally, which will further promote inventory de-industrialization.

Overall, the tight supply-side situation in the second quarter is still expected to continue, while the consumer side will also rise seasonally, but the marginal effect will decline after the first quarter yield reduction is basically realized, combined with the pressure of hedging market entry, the role of supply and demand in driving oil prices will be weakened, and more attention will be paid to the geopolitical and oil-producing countries’policy changes in the second quarter. On the trend, the current upward trend of oil prices continues. The Brent crude oil operation center is expected to be in the $65-75 range in the second quarter, but the market risk will increase in the middle and late of the second quarter, and there will be variables in the market.

On April 14, the fluorite commodity index was 99.47, unchanged from yesterday, down 21.98% from the peak of 127.49 points in the cycle (2019-01-03), and up 102.13% from the low of 49.21 points on December 18, 2016. (Note: Period refers to 2011-09-01 to date)

According to statistics, the domestic fluorite price trend is temporarily stable, the average domestic fluorite price is 2835 yuan/ton as of the 15th day. Recently, the domestic fluorite plant started normally, the mine and flotation plant started normally, the fluorite supply is normal, the recent downstream market is not good, the market demand for fluorite is weakening, and the fluorite market price trend is slightly lower. In recent years, the downstream units started to work poorly, the fluorite spot supply in the field was normal, and the downstream terminal receipt was not good, which led to a slight decline in market price trend. As of the 15th, the price of 97 fluorite wet powder in Inner Mongolia is 2700-3100 yuan/ton, the mainstream of 97 fluorite wet powder in Fujian is 2600-3000 yuan/ton, the price of 97 fluorite wet powder in Henan is 2600-3000 yuan/ton, and the price of 97 fluorite wet powder in Jiangxi is 2700-3100 yuan/ton. The price of fluorite has slightly declined.

The price trend of hydrofluoric acid in the downstream of fluorite is temporarily stable. The domestic market price of hydrofluoric acid is 10,100 yuan/ton as of the 15th day. The weak market price of hydrofluoric acid has a negative impact on the upstream fluorite market. Recent downstream refrigerant products start at a low level, the upstream fluorite and hydrofluoric acid demand is general, the recent downstream refrigerant trading market is general, hydrofluoric acid products prices slightly lower. Recent downstream refrigerant market transactions are cool, R22 refrigerant facility starts at 60%, R22 market facility start-up rate is temporarily stable, the main manufacturer of bulk water factory offer price is between 18,000-19,000 yuan/ton, but the manufacturer does not have bulk water spot, mainly a small number of cylinders shipped. In addition, the actual demand side of the market has not changed much, and the delivery market has increased. Domestic market price trend of R134a shocks, production enterprises equipment start-up rate remains low, refrigerant market demand is general, manufacturers mainly export. But the on-site transaction price does not change much. Businessmen buy on demand. Generally speaking, the downstream industry is in a general market. In addition, the fluorite market supply is normal and the price of fluorite is declining. Chen Ling, an analyst of business associations, believes that the price of fluorite market may be slightly lower.

Driven by many good news, international oil prices have recently shown a significant upward trend. By the end of the 10-day session, the price of light crude oil futures for May delivery on the New York Mercantile Exchange had risen by $0.63 to $64.61 a barrel, or 0.98 per cent. London Brent crude oil futures for June delivery rose $1.12, or 1.59%, to $71.73 a barrel.

Venezuela told the Organization of Petroleum Exporting Countries (OPEC) that its oil production fell to a long-term low last month due to sanctions and blackouts from the United States, Reuters reported. This strengthens the impact of global production restrictions and further tightens supply. Venezuela’s oil production in March was 960,000 barrels a day, down nearly 500,000 barrels a day from February, OPEC said in a monthly report released on October.

Others point out that as the Libyan conflict escalates, there are concerns that oil supplies from the oil-rich North African country will be disrupted and oil prices will gradually rise. The Financial Times quoted an analyst at the Australian and New Zealand Bank as saying that the risks facing crude oil supply were increasing, and that although the current battle was not near Libya’s main oil fields, “the risk of the battle spreading to the whole country is increasing.”

In addition, data released by the U.S. Energy Information Agency on the 10th showed that U.S. crude oil inventories had increased by about 7 million barrels in the previous week to a 17-month high, but gasoline inventories had fallen the most since September 2017, thus failing to improve market concerns about oil supply.

OPEC, Russia and other non-OPEC members agreed in December last year to cut production by 1.2 million barrels a day from January 1 this year. OPEC’s share of output cuts is 800,000 barrels a day, to be completed by 11 member countries outside Iran, Libya and Venezuela. A survey found that 11 OPEC member states bound by the new agreement had a production reduction rate of 135% in March, up from 101% in February.

At present, the international crude oil market is focusing on the meeting of major crude oil producers from June 25 to 26. Russian representative Dmitriyev has said that Russia hopes to increase production when it meets with OPEC in June due to improved market conditions and declining inventories. On the other hand, Emirates Energy Minister Mazruyi said on the 10th that Russia adheres to the oil production reduction agreement with OPEC and will not increase production unless it coordinates with OPEC. It is noteworthy that Saudi Arabia and its Gulf allies are trying to push ahead with larger production cuts than the latest OPEC agreement, despite pressure from President Trump to increase oil supply. Statistics show that Saudi Arabia, OPEC’s largest oil producer, saw the biggest drop in oil supply, with output in March down by 220,000 barrels compared with February.

Data show that in the first quarter of this year, the international oil price has refreshed its biggest single-quarter rise in nearly 10 years. Among the benchmark oil prices in New York and London, West Texas light crude oil futures prices, which rose the most rapidly in the New York market for three consecutive months, led to a cumulative rise of more than 31% in the first quarter, refreshing the biggest single-quarter rise since the second quarter of 2009; Brent crude oil futures prices in the North Sea of the United Kingdom rose 25% in the same period, also the biggest single-quarter rise in nearly 10 years.

In mid-April, fertile cities around the country had a strong atmosphere in the spring. With the gradual start of the terminal market, the overall trading situation was still acceptable, especially in the northern region. Although the early partial market progress lagged slightly, it has also improved in recent days. The spring market has not yet finished, and the summer market has started. So far, some enterprises have introduced the temporary price and policy of summer fertilizer, and collect money for some customers.

It is gratifying that the market situation of high nitrogen corn fertilizer is relatively ideal, and the price is at a higher level in the same period of previous years. In addition to demand pull, the support of raw material market is indispensable, but recently local urea prices began to fall. Influenced by supply increment, imported urea arrival and high prices in the downstream, domestic urea prices may continue to decline slightly in the short term. In this way, there is a lot of suspense about the future market of fertilizer in summer. The author believes that, despite the impact of raw materials, since the summer fertilizer market has been opened with a high profile, it may remain stable for some time.

Firstly, enterprises have begun to harvest fertilizer in summer. As mentioned above, part of the summer fertilizer market has started. Some enterprises aim at the opportunity of urea soaring. They have issued quotations and policies to collect money. In order to avoid the price of high nitrogen fertilizer rising further with the urea market, some distributors have to pay a proper amount of money to stock up. Once the price of urea falls, the market pessimism will increase, so the price of high nitrogen fertilizer also has the risk of falling, but considering that some customers have been pre-harvested at relatively high prices in the earlier period, enterprises will not easily cut fertilizer prices substantially, in order to cater to the subsequent fertilizer preparation psychology downstream, preferential policies may be narrowed or cancelled.

Secondly, there is a large surplus space for fertilizer demand in summer. Generally speaking, the northern field crops are planted in a wide range of areas, and the fertilizer market is relatively more active in spring. However, during the summer, most of the areas are planted with maize and rice, and the demand for fertilizer can be imagined. At present, only part of the corn fertilizer market has a slight trend, and the downstream caution still exists, mainly due to the unknown future market of raw materials and the long-term use of fertilizer. With the clarity of the market and the promotion of time, the terminal demand will be released. Therefore, in the case of weakening raw material prices, the overall market may advance slowly in the short term, but in the long run, it is still possible.

Finally, local environmental safety monitoring pressure will persist. A series of topics, such as environmental protection and safety, must have been well known to everyone. The original situation has been more severe. Unexpectedly, the serious accident of explosion of Yancheng Chemical Plant in Jiangsu Province has been aggravated again recently, and unprecedented production safety inspection has been carried out in some areas. Although the normal production of most fertilizer enterprises is not a big obstacle, it inevitably results in partial phased shutdown and production restriction. Spring and summer markets almost uninterrupted convergence, waiting for release of demand or will lead to a partial time of tight situation, then the summer fertilizer market heat will rise.

Generally speaking, although the anticipated decline in urea price will inevitably affect the compound fertilizer market in spring and summer, or delay the progress or fall the price, based on the current situation and the forecast of the development at both ends of supply and demand, the fertilizer market will remain stable in summer.

Since the beginning of the year, the spot price of methanol has risen first and then fallen. Among them, the prices in eastern and southern China are similar to those in the beginning of the year. Although prices in Shaanxi, Inner Mongolia, Henan and Hebei declined in late March, they increased by about 200 yuan/ton compared with the beginning of the year. Investigate its reason, the mainland enters the spring maintenance period, many enterprises centralized maintenance leads to the reduction of supply, the price of the mainland is easy to rise and difficult to fall, while East and South China are affected by both domestic and foreign markets, the increase of import to port, the entry of foreign equipment into the maintenance period, the continued increase of port inventory and the non-sustainability of depot drainage are the factors in turn. The prices of East and South China are in the same order. After the rebound, there was a more obvious drop. In the future, methanol prices are expected to show an inverted V-shaped trend.

Maintenance landing and demand recovery

At the end of March and the beginning of April, the Mainland manufacturers such as Inner Mongolia and Shaanxi came to the ground for spring overhaul. The market was in a state of supply reduction, and the willingness of the Mainland manufacturers to bid rose. However, due to the relatively high inventory level of Northwest manufacturers in March and the obvious price increase since the beginning of the year, it is expected that under the stimulation of the new round of maintenance, the price increase will be limited, or less than the increase since the end of the year. Compared with East China, Mainland prices are more resilient.

On the demand side, starting in mid-late March, offshore olefin enterprises such as Shenghong in Jiangsu, Xingxing in Zhejiang and Huisheng in Nanjing all restored to normal levels, which accelerated the procurement of methanol and the actual consumption of coastal stocks. In addition, the safety inspection of formaldehyde and other downstream areas may affect the procurement demand in the short term, but in the medium and long term, the impact is not significant, and the traditional demand still plays a leading role in methanol consumption.

Slow Deposit Speed in Port

Up to now, the total inventory of methanol in eastern and southern ports of China is 10.971 million tons, which is at an absolute high level in the past five years. According to Zhuo Chuang’s statistics, after the depot was discharged on March 21, the total stock of the port dropped again by a small margin of 0.74 million tons on March 28.

Iran’s 3 methanol plants with 5.6 million tons per year failed to restart in March. In addition, South America has always been an important source of methanol imports in China. In the competition between the United States and Russia, the United States sanctions against Venezuela in South America led to the blockage of cargo shipments in the region. The above factors will cause the decrease of methanol import in April.

Nevertheless, the continuity of depot disposal is doubtful, and the absolute high level of inventory leads to the weakening of market mentality. From the point of view of port stocks of other liquid chemicals, it is also at an absolute high level in the past six years. Therefore, the overall price of liquid chemicals including methanol is under pressure. Price rebound is only a short time before demand continues to grow.

By the end of April 2, methanol futures hedging was net hedging, with a holding capacity of 72770 tons. The net hedging volume of methanol September contract increased, and the seller’s hedging position was obvious. It can be seen from this that the seller’s hedging is in the main position. This situation occurred in January when the base spread continued to weaken, and there was no risk arbitrage space in part of the time, which made some manufacturers and traders participate in the base trade, lock in a large number of spot arbitrage positions, resulting in some inventory consolidation. Stocks locked in futures arbitrage are gradually released on the May contract of methanol futures, and the market will be impacted by the withdrawal of futures arbitrage or the start of delivery.

On the whole, the methanol disk is in a wide oscillation period for the time being, and the trend market needs the cooperation of key issues

In the fourth quarter of 2018, due to abundant supply and weak demand, the supply and demand pattern of polypropylene market was seriously unbalanced and prices continued to weaken. Since the end of the year, with the gradual rise of international crude oil prices, the cost focus of polypropylene has been shifting upwards, and the price has risen accordingly. However, as the problem of oversupply has not been alleviated, the trend of polypropylene is obviously weaker than other chemical products.

Strong cost support

The sustained rise in crude oil prices is the main reason for this round of polypropylene price rebound. According to OPEC’s monthly report in March, the global crude oil demand in the first quarter is 99.02 million barrels/day and the supply is 99.03 million barrels/day (of which, in March, OPEC’s output is 30.4 million barrels/day, non-OPEC’s output is 63.59 million barrels/day, OPEC’s LPG and unconventional oil and gas supply is 5.4 million barrels/day). There is only 10,000 barrels/day surplus in the global market, and the supply and demand basically reach a

Saudi Arabia and Russia are resolute in reducing production and raising prices; Venezuela’s crude oil production is expected to decline further due to the turbulent domestic situation and Iran’s further sanctions imposed by the United States; the number of active drilling wells in the United States is continuously decreasing, and it is difficult for production to rise in the short term. Later, the international crude oil supply will shrink further, the market will develop from oversupply to shortage, and the price of crude oil is likely to rise further.

Fundamentals remain weak

On the supply side, at present, the start-up load of polypropylene production enterprises in China is 88.33%, which is 1.43% lower than the previous statistical period. Among them, Sinopec Yangtze Petrochemical plant started, while Hunan Changsheng plant stopped; PetroChina Dalian organic new plant stopped. In early April, Dalian Organic and Zhejiang Hongji’s plant is expected to start up and domestic supply will increase. Incrementally, Jiutai’s MTO device is in the test run stage, and the product is expected to be launched in May.

In terms of stocks, the petrochemical stocks of polypropylene have declined. However, the previous inventory is not digested by the terminal, but transferred to traders and downstream enterprises. Therefore, although Petrochemical stocks have declined, because of the backlog of downstream stocks, downstream enterprises are not willing to take goods, more are just in need of purchasing, and the bargaining power of petrochemical enterprises has not improved.

In terms of demand, downstream start-up load is relatively stable. Among them, the start-up load of plastic knitting enterprises is 67%, the start-up load of copolymer injection molding enterprises is 65%, and the start-up load of BOPP enterprises is 56.8%. Later, the household appliances industry is about to enter the peak consumption season, and the demand for copolymer injection moulding is expected to increase, which forms a certain support for the price of polypropylene.

Forecast for future market

In summary, the previous rise in polypropylene prices was largely driven by rising costs. At present, the global crude oil supply and demand pattern is changing from tight balance to supply shortage. The momentum of price rise is sufficient, and the cost-side support for polypropylene is obvious. However, on its own fundamentals, supply is relatively abundant, and terminal demand shows no obvious signs of warming up. Although Petrochemical inventories have declined, they are only transferred downstream and not digested by the terminal. In this case, the rise of polypropylene price should be treated as a temporary rebound. The rebound height of polypropylene depends on the increase of crude oil price. Operationally, the suggestions are mainly short.

1.Price Trend

According to the monitoring data of business associations, as of April 3, the average price of domestic cyclohexanone market was 9,433 yuan/ton, and the domestic market of cyclohexanone rose slightly.

II. Market Analysis

Products: Cyclohexanone market has increased slightly, the purchasing situation of downstream chemical fiber factories is still acceptable, some factories have increased their quotations, the market has reduced the supply of low prices, and the solvent market has just needed to purchase. The mainstream offer of cyclohexanone in North China market is sent in cash from 9400 to 9600, the mainstream offer in East China market is sent in cash from 9700 to 9900, and the mainstream offer in South China market is sent in cash from 11000 to 10300.

Industry Chain: Pure Benzene: Driven by the rising stock market and commodities, East China’s offer rose, but the buying did not follow up. Spot buy 4300 yuan/ton, offer 4500-4550 yuan/ton, April 4350-4600 yuan/ton, May 4450-4600 yuan/ton. Caprolactam: Caprolactam liquid market trend is strong, spot supply is tight, manufacturers are reluctant to sell at low prices, low-end prices continue to decrease, the procurement atmosphere of the polymerization plant is still acceptable, and the field mentality preference. The liquid spot price of caprolactam is delivered at 14100-14300 yuan/ton acceptance. On the solid side, due to the rising price of liquids, part of the solid side sells at a low price. The price refers to 14500-14700 yuan/ton, which is remitted to us now. The price of the northern part is slightly lower.

3. Future Market Forecast

The cost surface is relatively stable. The export volume of cyclohexanone in the market fluctuates little with the adjustment of the start-up of chemical fiber plant. Cyclohexanone analysts, business associations, predict that short-term cyclohexanone market stabilization is the main adjustment.