I. Crude Oil Price Trend

In March, crude oil showed a volatile upward trend. The steady progress of major OPEC production cuts boosted oil prices. Saudi Arabia’s production cuts were remarkable and its plan to promote the extension of production cuts was remarkable. In addition, the number of active oil drilling wells in the United States dropped sharply, and crude oil stocks decreased. However, worries about slowing economic development limited the upward space for oil prices. As of March 18, Brent charged $67.54 per barrel and WTI $59.09 per barrel.

II. Futures Price Trend

Since mid-March, the trend of futures has fallen sharply. Liansu L1905 contract has recently fallen below the previous 8500 point support and reached a new low of 8300. At present, Liansu L1905 contract daily line above the mean line suppression is strong, there is a possibility to continue downward, but the lower detection 8250-8300 has support, the position of Yongan futures single dominant, so the overall decline is limited. In the short term, the 8500 position of L1905 contract of Lianyuan Plastics has been changed from support position to pressure position, and the upstream is weak. It is suggested that the operation of empty sheet holding be changed to short multi-operation after breaking through 8450-8500 position.

3. The Trend of Spot Price

In March, polyethylene spot continued to decline, the accumulation of petrochemical stocks caused by the Spring Festival holidays was difficult, and petrochemical had to implement a price reduction policy. Traders have a pessimistic mentality and follow the downturn to seek delivery. However, the downward factors of both spot and futures lead to cautious downstream takeover, low market trading atmosphere and high transaction resistance. Overall, although oil prices have risen, the slowdown in economic development has limited upward space. Polyethylene futures and spot markets have declined one after another, coupled with the high spot petrochemical inventory, so oil prices support this market is very limited, market pessimism is strong, market pressure is particularly obvious.

On March 20, the PX commodity index was 72.00, unchanged from yesterday, down 29.69% from its peak of 102.40 points in the cycle (2013-02-28), and up 58.07% from its low of 45.55 points on February 15, 2016. (Note: Period refers to 2013-02-01 to date).

Recently, the domestic market price trend of p-xylene has been temporarily stable. Pengzhou Petrochemical Plant has been running steadily. Urumqi Petrochemical Plant has started 50% of its operation. Fuhaichuang Aromatic Hydrocarbon Plant has started a line. CNOOC Huizhou Refinery and Chemical Plant has been overhauled. Other units have been running steadily for the time being. The domestic market supply of p-xylene is normal. The market price trend of p-xylene is temporarily stable. The opening rate of PX plant in Asia is about 80%. On March 20, the closing price of p-xylene in Asia dropped by 14 US dollars per ton. The closing price is 1043-1045 US dollars per ton FOB in Korea and 106 2-1064 US dollars per ton CFR in China. More than 50% of the domestic units need to be imported. The decline of foreign prices has a positive and negative impact on the domestic market price of p-xylene, and the price of p-xylene in the market fluctuates.

On March 20, the May futures market price of WTI crude oil in the United States rose to $59.83 per barrel, an increase of $0.80. The May futures price of Brent crude oil fell to $68.50 per barrel, a decrease of $0.89. The slight increase in crude oil price has little effect on the price of downstream petrochemical products and has temporarily stabilized the price trend of xylene market. Recent textile industry volatility, PTA prices maintained a low trend on 21 days. The average offer price in East China was raised near 6500-6600 yuan/ton. As of 21 days, domestic PTA start-up rate was about 84%, polyester industry start-up rate was about 80%, downstream production and sales rate increased, but PTA market prices were lower, and the price of PX market is expected to remain volatile in the later period.

Recently, Zheng Alcohol regained its weakness under the pressure of reducing fees and taxes and driving of internal and external disc devices. The 1905 contract fell below 2500 yuan per ton. The author believes that with the follow-up spring inspection and the start of Jiutai MTO, methanol prices in the Mainland are relatively strong, while port prices are always suppressed by high inventory. In the case of price differentiation between the mainland and the port, Zheng alcohol futures price or into the oscillation mode.

Spring Inspection and Jiutai Production Support Methanol in Northwest China

Since March, methanol prices in Northwest China have remained relatively strong under the expectations of spring maintenance and Jiutai MTO driving. As of March 19, the mainstream market price of methanol in Inner Mongolia was 2200 yuan/ton, up 150 yuan/ton from March 1, up 7.3%. As of March 19, the mainstream market price of methanol in Shandong was 2270 yuan/ton, while that in Hebei was 2300 yuan/ton, which was 100 yuan/ton lower than that on March 1 and was flat.

March-May is the centralized maintenance period for methanol production enterprises in the Mainland. According to the current maintenance plan, the methanol production capacity involved in maintenance this year exceeds 10 million tons/year, which is equivalent to the same period last year. From the time point of view, the production capacity of maintenance in March is 2.74 million tons/year, in April is 6.62 million tons/year, and in May is 2.03 million tons/year. Maintenance is mostly concentrated in late March to April, which is ahead of the same period last year. From the regional perspective, methanol overhaul in the Mainland is mostly concentrated in the northwest of China, involving production capacity of 8.5 million tons/year, with Inner Mongolia accounting for the largest proportion, including China Coal Yuanxing 600,000 tons/year, Inner Mongolia Rongxin 900,000 tons/year, Jiutai 1 million tons/year, Yigao 300,000 tons/year, Donghua 600,000 tons/year, New Austria 600,000 tons/year, Jinchengtai 300,000 tons/year, involving production capacity of 4.3 million tons/year. From the perspective of production profit, since 2019, taking Inner Mongolia as an example, the average profit of methanol production is 47 yuan/ton, while the average profit of methanol production in the same period of 2018 is 450 yuan/ton. Although spring overhaul is mostly required by equipment, enterprises are more willing to carry out overhaul when production profits are poor.

Judging from the downstream demand, the 600,000 tons/year MTO plant in Jiutai, Inner Mongolia, started on March 20, and the end of March to April is the period of spring maintenance in Inner Mongolia in particular. From this point of view, the supply and demand pattern of methanol in Inner Mongolia will continue to be tight under the influence of Spring Inspection and Jiutai production. The formaldehyde enterprises in Shandong, Hebei and other places will also start construction one after another, which will support the price of methanol to a certain extent.

Port inventory pressure remains high

Compared with the mainland, the port methanol has always been depressed by inventory, and the price has dropped slightly. As of March 19, the mainstream market price of methanol in Jiangsu was 2485 yuan/ton, while that in South China was 2480 yuan/ton, which was 80 yuan/ton lower than that on March 1 and was flat. As far as port inventory is concerned, as of March 13, 80.86 million tons of methanol were stored in East China Port and 21.07 million tons in South China Port, totaling 1019.3 million tons. Although it has decreased from the previous week, it is not significant and the inventory has not been effectively digested.

Since the beginning of March, some external disc units have been repaired, including Iranian ZPC 1.65 million tons, horse oil 2.7 million tons, Brunei BMC 850,000 tons, Qafac 900,000 tons and Oman OMC 105,000 tons. It is expected that the arrival of methanol will be reduced slightly in mid-and late March. However, most of the outboard overhaul devices will be restored in early April, Malou has started this week, Marjan of Iran also plans to produce products this week. It is expected that the follow-up imports will remain high, and the depot cycle of the port has not yet been opened.

In summary, with the development of methanol spring maintenance and the start of Jiutai MTO, methanol prices in Northwest and Inner Mongolia are expected to be relatively strong, while ports are always suppressed by high inventory and the depot cycle is delayed. Mainland and port market differentiation, Zheng alcohol futures prices are expected to turn into oscillation.

According to the U.S. Energy Intelligence Agency, gas production in the United States increased by 10 billion cubic feet a day in 2018, an 11% increase over 2017.

In a press release, the company said the development report was the largest annual increase in production on record, hitting an all-time high for the second consecutive year.

According to EIA’s monthly crude oil, leased condensate and natural gas production report, the average daily output of natural gas in the United States in 2018 was 101.3 billion cubic feet, a record high.

Measured by market output and dry gas production, U.S. natural gas production also reached a record 89.6 billion cubic feet per day and 83.4 billion cubic feet per day, respectively.

In 2018, with the exception of June, total gas production in the United States increased monthly, culminating in a record 107.8 billion cubic feet per day in December 2018. In December 2018, market natural gas production and dry gas production reached monthly highs of 95 billion cubic feet per day and 88.6 billion cubic feet per day, respectively.

With the increase of natural gas production, gas exports through pipelines and liquefied natural gas increased for the fourth consecutive year, reaching 9.9 billion cubic feet per day.

In 2018, total natural gas exports increased by 14% and liquefied natural gas exports by 53%, reaching 3 billion cubic feet a day. In December 2018, pipeline and LNG exports reached monthly highs of 7.7 billion cubic feet per day and 4 billion cubic feet per day, respectively. Since the United States became a net exporter of natural gas for the first time in nearly 60 years in 2017, its natural gas exports continued to exceed imports in 2018.

According to oil and gas pipeline news, OPEC’s oil production declined slightly in February due to production cuts in Venezuela, Saudi Arabia and Iraq, but increased production in Libya and Angola offset this impact.

In its monthly oil market report, OPEC said oil production averaged 30.55 million barrels a day in February, down by 221,000 barrels from last month.

OPEC and non-OPEC members agreed last year to cut production by 1.2 million barrels a day for six months starting next January to reduce oil inventories and support crude oil prices.

According to the report, OPEC crude oil demand is expected to reach 30.5 million barrels a day in 2019, 1.1 million barrels a day lower than the 2018 forecast.

“The slowdown in global economic growth is also expected to reduce oil demand to some extent in 2019,” OPEC said in its report. Global oil demand is expected to increase by 1.24 million barrels a day this year, down from 1.43 million barrels a day last year.