Huatai Futures: Methanol port inventory quickly clears out, watch for progress in US-Iran negotiations

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Source: Huatai Futures

Author: Chen Li

Methanol Outlook

Market News and Key Data

Mainland: Q5500 Ordos Thermal Coal 560 yuan/ton (+0), Inner Mongolia Coal-based Methanol Production Profit 768 yuan/ton (-68); Mainland methanol prices: Inner Mongolia North Line 2363 yuan/ton (-68), Inner Mongolia North Line Basis -127 yuan/ton (-18), Inner Mongolia South Line 2405 yuan/ton (-35); Linyi Shandong 2850 yuan/ton (-10), Lunan Basis -39 yuan/ton (+40); Henan 2700 yuan/ton (-70), Henan Basis -189 yuan/ton (-20); Hebei 2725 yuan/ton (+0), Hebei Basis -104 yuan/ton (+50). Longzhong mainland factory inventory 432,980 tons (-52,420), Northwest factory inventory 257,100 tons (-43,500); Longzhong mainland factory pending orders 286,370 tons (+7,077), Northwest factory pending orders 144,500 tons (+2,500).

Portside: Taicang methanol 3,045 yuan/ton (-168), Taicang basis -44 yuan/ton (-118), CFR China $401/ton (-4), East China import price spread -149 yuan/ton (-51), Changzhou methanol 3,060 yuan/ton; Guangdong methanol 3,155 yuan/ton (-160), Guangdong basis 66 yuan/ton (-110). Longzhong port total inventory 1,155,500 tons (-106,200), Jiangsu port inventory 575,500 tons (-51,700), Zhejiang port inventory 285,000 tons (-33,000), Guangdong port inventory 161,000 tons (-7,000); downstream MTO operating rate 84.08% (+2.88%).

Regional Price Differentials: Lubei-West-North -280 spread 128 yuan/ton (+38), Taicang-Inner Mongolia -550 spread 133 yuan/ton (-101), Taicang-Lunan -250 spread -55 yuan/ton (-158); Lunan-Taicang -100 spread -295 yuan/ton (+158); Guangdong-East China -180 spread -70 yuan/ton (+8); East China-Chongqing-Yu -200 spread -40 yuan/ton (-168).

Market Analysis

The market continues to monitor US-Iran negotiations, but the US’s conditions are strict, Iran refuses to accept negotiation terms and ceasefire, and further developments remain uncertain. Methanol showed a pattern of opening low and rising, partly because the US-Iran talks shifted away from the previous chemical sector’s continuous rise, and partly because the conditions offered by both sides are still difficult to agree upon, so it remains in a “talk while fighting” stage.

Portside: Chinese ports are rapidly clearing inventories, with April import arrivals expected to further decline to historic lows, and port clearance linked to the duration of Iran methanol plant shutdowns. Regarding port demand, Xingxing and Shenghong MTO maintenance continues, with attention on Shenghong’s expected restart in April.

Mainland factory inventories continue to decline, with coal-based methanol plant operations slightly lower at high levels, and spring maintenance volumes remain limited. Traditional downstream operations are increasing, formaldehyde continues seasonal increases, and MTBE operation rates remain high supported by exports.

Strategy

Unilateral: Cautiously buy on dips and hedge

Inter-commodity: None

Cross-commodity: None

Risks

Iran conflict developments, Strait of Hormuz navigation status, duration of Iran plant shutdowns, duration of MTO maintenance

Investment Consulting Business Qualification: Securities Permit [2011] No. 1289

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