Methanol prices plummet！

On October 19, the thermal coal futures ZC2201 contract was the first to fall by the daily limit, followed by several direct downstream methanol, urea, ethylene glycol have fallen by the daily limit.

The story began on the afternoon of The 19th. After the futures closed at 15:00 that day, some news began to be forwarded:

At 13:00 on October 19, Yulin city held a special meeting on coal supply protection for the fourth quarter. The meeting conveyed the spirit of vice Premier Han Zheng's research on the instructions of the National Development and Reform Commission this morning, requiring that the coal price in the main coal-producing areas of Shanxi, Shaanxi and Mongolia be lowered by 100 CNY/ton on the existing basis from today. At the meeting, Yulin Mayor Zhang Shengli proposed that before 18 o 'clock today all state-owned enterprises in Yulin take the lead in reducing prices of 100 CNY/ton, has signed a long association to protect the price of enterprises shall not exceed 1200 CNY/ton, private enterprises shall not exceed 1500 CNY/ton. For those who refuse to carry out all procedures in yu state-owned enterprises will be stopped, and the related units such as the National Development and Reform Commission, energy Bureau and public Security Bureau will take administrative measures.

The reporter learned from the National Development and Reform Commission that recently, Qinhuangdao Port, as the main hub of China's northern coal transportation to the south, reached a consensus with coal, electricity upstream and downstream enterprises, railway and other transportation units, and signed the "Letter of Commitment to Ensure supply, Stabilize prices and Operate in good faith". During the heating season of this winter and next spring, the price of thermal coal in the ports around the Bohai Sea will be 5500 calories not more than 1800 CNY/ton, 5000 calories not more than 1500 yuan, 4500 calories not more than 1200 CNY/ton, and other high calorie resources not more than 2000 CNY/ton. Port guidance prices will be adjusted reasonably and timely according to market supply and demand and guarantee requirements.

The National Development and Reform Commission emphasized strengthening supervision and severely investigating and punishing malicious speculation of thermal coal futures by capital in zhengshang Research Institute; And said: coal is an important basic energy, closely related to the national economy and people's livelihood, the current price rise has completely divorced from the fundamentals of supply and demand, and near the heating season, the price is still showing a further irrational trend of rising. The National Development and Reform Commission will make full use of all necessary means stipulated in the Price Law to study specific measures to intervene in coal prices, promote the return of coal prices to a reasonable range, promote the return of rationality of the coal market, ensure the security and stable supply of energy, and ensure the people warm winter.

Under the background of global energy crisis, China's carbon neutralization and carbon peak policy standardizing energy consumption enterprises, as well as the shortage of domestic coal resources, this year's methanol futures main contract rose sharply in the early stage under the support of limited supply and cost promotion, reaching a high of 4235 CNY/ton. In less than 10 days, futures plunged nearly 1,000 points, and extreme prices continued to be staged.

19 afternoon futures close, Taicang paper goods began to show a panic selling situation, to 5 p.m., down more than 100 yuan, that night futures follow the black system limit; 20, spot opened sharply down 260 CNY/ton, long-term paper goods is the same, the whole morning few buy heard; To the afternoon, east China, South China are beginning to breed some contract buying demand, which seems to indicate that 20 day and night plate looks not directly limit, but substantially lower open fate is still unavoidable.

However, some coal-to-methanol enterprises said: we can not buy the coal at a lower price. Some people may raise a question, most factories have supporting coal mines, we can not use the current spot price to calculate the raw material cost of the factory. But in fact, many factories do not use the coal in their own methanol plants, so there are still a large number of factories need to extract. In addition, some enterprises are coal mine and methanol enterprises independently accounting, in the case of methanol loss, why not stop the methanol plant and sell high-priced coal, why not do it?

At present, some methanol plants in northwest China charge more than 2000 CNY/ton of coal to the plant, and the cash flow cost around 4500 CNY/ton does not seem to support such a slump. Today, the actual order in north Shandong has been negotiated down to 3560-3600 CNY/ton, and the ex-factory price in northwest China is reversed to 3300-3400 CNY/ton. It seems that it is not logical to sell coal, which is such a difficult raw material, at a loss price of more than 1,000 yuan per ton. On the day before the deadline, the mTO factories datang and Jiutai, which have been sold abroad recently, have reduced the load to 70% due to cost problems. So watch to see if any new plants start to shut down or download again to support the supply-constrained logic.

As for the limit of natural gas, Sichuan and Chongqing plant plans to stop production in the middle of November and at the latest to the beginning of December. It is reported that some gas plants have already started load reduction operations and reduced the scheduled contract shipment next month. The recent temperature in Iran is comfortable, but the situation of global natural gas tension will not be avoided in Iran, so the impact of temperature change in Iran on natural gas supply is also closely watched.

In fact, the market was already concerned about supply and demand problems before the 19-20 slump. The parking load reduction of coastal MTO has led to a sharp drop in port demand, and the slow unloading and reverse flow of port areas caused by slow water diversion and chemical blockage in the port have made it difficult for coastal stocks to be exhausted. With the shutdown of mTO and the beginning of methanol sales in the mainland, the initial strong mainland also began to gradually highlight the state of oversupply for a short time. When the mainland and the coastal areas started to oversupply simultaneously, it seemed to have predicted the arrival of a sharp drop. And macro is really the biggest fuse, coal futures crazy situation blinded the eyes of the bulls.

From November to December, there are still MTO parking plans in Zhejiang, and the continued weakening of demand will make east China likely to be exhausted in November or large probability. The 2021 high is now in place and it is recommended to keep an eye on marginal changes in supply and demand.