Everbright Futures: Methanol leads the chemical sector, hitting a new rebound high

Port inventories continue to be worked down, compounded by arbitrage trading both at home and abroad. Methanol leads the chemical sector, and the biggest intraday gain in the front-month contract exceeds 5%. Currently, methanol arrivals at ports have fallen to a low level; port inventories have been systematically drawn down from their high point. Under these circumstances, methanol prices have some support. On the demand side, although MTO unit load is relatively low, the recovery of MTO unit profits may increase refiners’ willingness to restart production. In addition, current prices in Southeast Asia and India are higher than China’s port-arrival prices, which will also stimulate arbitrage trading. As the situation in the Middle East has not yet eased, crude oil volatility has intensified, affecting the methanol futures’ price trend. Investors are advised to control positions and guard against extreme risks.

From an overseas perspective, recently three Iranian units are planned to restart, and there have been inquiry/quotation activities. In the future, Middle East supply may gradually recover, so it is important to watch changes in U.S.-Iran relations and whether the Strait of Hormuz remains smoothly navigable. Meanwhile, recently the startup rates for three units in Malaysia have been relatively low. Overall, arrivals will remain at a low level.

From a domestic perspective, currently traditional downstream industries are still in the post-holiday recovery period. Meanwhile, the operating rate of MTO units that procure methanol externally in the eastern region is significantly below normal. The main MTO projects in Zhejiang Jiaxing and Lianyungang have continued to suspend operations, and in the short term domestic MTO companies have no plans for any unit changes. (Everbright Futures)