Slow recovery of downstream demand, methanol price “all the way down” in March

1、 Price trend


In March, the domestic methanol market continued to decline. According to the price monitoring of business agency, the average price of domestic methanol market at the beginning of the month is 2022 yuan / ton, and the price of domestic methanol market at the end of the month is 1607 yuan / ton, down 20.52% in the month, 32.40% compared with the same period last year.


2、 Market analysis


Product: affected by the emergency safety events, the downstream demand of domestic methanol spot market recovers slowly, especially the traditional downstream market; however, after the impact of the development of foreign epidemic situation in the middle of March, the continuous drop of foreign financial market triggers the fuse, the international crude oil price drops to $20.8/barrel, the external environment pressure, the methanol drop is wide, and the new low of the year has been refreshed in many places, and some regional production enterprises have touched on it Production line or loss.


PVA 2699

Industry chain: formaldehyde: this month, the domestic formaldehyde market fell in a wide range. In the context of global public health events, the overall start-up of domestic formaldehyde enterprises at the beginning of the month was depressed. With the introduction of domestic policies to support enterprises to resume work and resume road transportation, most enterprises began to resume production in the middle of the month. Although the domestic public health events improved this month, affected by the external environment, the U.S. stocks repeatedly broke, international crude oil plummeted, and the domestic upstream methanol level continued to decline. In this context, the cost side is not enough. The export of some plate enterprises in the lower reaches is affected by the overseas epidemic, the orders are blocked, the enterprises have sufficient inventory and Limited procurement. Formaldehyde enterprises are under pressure from the demand side, and the overall transaction is flat.


Acetic acid: the domestic acetic acid market continued to decline in March. At the beginning of the month, some acetic acid production enterprises considered the annual production requirements, costs and other situations, and increased the starting load of the unit, resulting in the increase of the spot supply in the market, aggravating the situation that the market supply is greater than the demand. In addition, the northwest, Henan and other spot manufacturers have a large inventory pressure, passive competitive bidding, and driving the market price transaction down.


Dimethyl ether: this month, the market price of dimethyl ether continued to fluctuate downward, and the trading atmosphere was weak. After March, the domestic dimethyl ether industry, except for some enterprises, has basically entered a comprehensive production state. However, due to the continuous price reduction in the later period, some enterprises have reduced their load production. At present, Sichuan Lutianhua, Shandong shengdeyuan and Shandong Yuhuang have not started construction. With the gradual fermentation of the international epidemic, the crude oil market has been greatly impacted. This month, the crude oil price has been fluctuating downward, which has seriously impacted the price of liquefied gas and brought down the volume and price of dimethyl ether trade.



Industry: according to the price monitoring of the business agency, in March 2020, there are 24 kinds of commodities in the list of rise and fall of bulk commodity prices in the chemical industry sector, including 7 kinds of commodities with an increase of more than 5%, accounting for 8% of the number of commodities monitored in the sector; the top three commodities with an increase are isopropanol (55.64%), methylic acid (20.51%) and ammonium chloride (20.48%). There are 59 kinds of commodities falling on a month on month basis, 46 kinds of commodities falling by more than 5%, accounting for 52.9% of the number of commodities monitored in the sector; the top three products falling are pure benzene (- 49.82%), crude benzene (- 36.94%) and toluene (- 33.67%). This month’s average rise and fall was – 8.47%.


3、 Future forecast


Business club’s view: on the positive side, the domestic methanol price continues to decline, some of which has fallen near the cost line, and some of the factories have lost money; most of the factories in the main production area have little inventory pressure, and the purchase of purchased olefins is relatively considerable. On the negative side, overseas public security incidents triggered market concerns. The trend of international crude oil, finance and stock market was weak, and market participants were worried about it. Port demand was limited, and the arrival of inventory was stable, but the unloading speed was slow due to the shortage of storage capacity. After the gas limit in Iran was eased, methanol production increased, and it is expected to arrive in China in the next March April. At present, the financial environment and international oil price have become the main logic affecting the bulk commodities, and the product fundamentals have little impact, so it is possible for methanol to continue to explore the bottom. The methanol analysts of the business club predict that the methanol market in April is still weak and volatile.


Weak cost support, weak demand, PP price fell in March (3.1-4.1)

1、 Price trend


According to the data monitored by the business agency, the domestic PP market fell in March, and the spot price decreased significantly. As of April 1, the main offer price of T30S by domestic producers and traders was about 6550.00 yuan / ton, a decrease of 5.53% compared with the average price at the beginning of March.


PVA 2088 (PVA BP20)

2、 Cause analysis


Upstream: on the upstream side, propylene was affected by OPEC meeting and international market game in March, and the news of international crude oil’s multiple downturns was obviously negative for propylene. At present, the propylene operating rate is not high and the inventory is not much, so the early decline is not significant, and the later decline trend is gradually obvious. The downstream isopropanol is one of the raw materials of disinfectant, which has a positive impact on propylene due to the impact of public health events. But other downstream market declines are large. In addition, downstream factories have narrow profit space, and the industry is generally bearish, dragging down the price of propylene, resulting in a volatile decline in March. At the beginning of April, there may be more propylene enterprises to start production and increase production. It is expected that propylene price will continue to explore trend in recent days;



Product: in March, the price of domestic PP market fell in shock, and the waiting atmosphere on the whole was still heavy. Petrochemical enterprises are under pressure to reduce the factory price, and traders are down. The resumption of downstream PP plant is normal, and the operation rate is not ideal. The atmosphere of on-site purchasing inquiry is low, and the demand follow-up is weak. The business confidence is not strong, the message face lacks clear guidance message and the stock gradually builds up, the traders mostly quote according to their own inventory situation. The overall performance of futures is also short, which is obvious with falling sentiment.


3、 Future forecast


PP analysts of the business club think: there is no doubt that the domestic PP spot market in March was affected by the complex impact of domestic shutdown, and the price fell. The upstream propylene price also fell in shock, and the support for PP cost end was not good. The return rate of downstream factories needs to be further improved. In terms of demand, the order follow-up is not timely, and small orders are mainly concluded. Petrochemical plant inventory pressure, the end of the month to complete the task of profit. PP market is expected to continue to weaken in the near future.


The price of toluene fell sharply this week (March 23-29)

1、 Price trend


According to the data in the large scale list of business agencies, the domestic toluene market price fell sharply this week. As of Friday, the domestic average price was about 3450 yuan / ton, down 8.73% on last week.


2、 Analysis and comment


PVA 1799 (PVA BF17)

1. Product: the overseas epidemic continues to spread, worried about the shrinking demand for crude oil due to the economic recession, and Saudi Arabia and Russia have no sign of resuming production reduction negotiations. Affected by this, the international crude oil price continues to fall sharply this week, as well as the price of toluene in the South Korean market, the main source of toluene import. Although domestic enterprises have entered the resumption period, the market demand is improving slowly, and the domestic toluene price Georgia followed the decline. At present, the mainstream price in East China is around 3600 yuan / ton.


2. Industrial chain:


Upstream, in terms of crude oil, the international oil price remained wide and volatile after the sharp fall at the beginning of this week. As of Friday, Brent futures fell 7.21%, Brent futures fell 4.12%, WTI futures fell 0.77% and Dubai futures fell 10.45%.



In the downstream, TDI, at present, the quotation of domestic goods with bills is about 10100 yuan / ton. It is expected that the market trend of TDI will be hard to be optimistic next week. Pay close attention to the later information guidance of the factory and the actual market trading situation. In PX market, the price of domestic Sinopec’s enterprises this week is about 5000 yuan / ton, and the latest price on the outside market is about $473 / ton for FOB South Korea and $491 / ton for CFR China. It is expected that PX market price will maintain a downward trend next week.


3、 Future forecast


Toluene analyst of business and chemical branch said: next week, we will continue to focus on the news of OPEC + production reduction agreement, concern about global economic recession due to the continuous spread of overseas epidemic, international crude oil trend and the progress of downstream enterprises’ resumption. Overall, it is expected that toluene prices in the international crude oil market and South Korean market will continue to fluctuate broadly next week, and toluene prices in the domestic market may follow the shocks next week.


Stable operation of magnesium Market

Magnesium market trend


On March 30, 2020, the factory cash price including tax of magnesium ingots (99.9%, non pickling, simple packaging) in main domestic production areas was slightly recalled, and the overall operation was stable. At present, the mainstream quotation range is 13700-14000 yuan / ton, and the actual single negotiation is the main part.


PVA 1788 (PVA BP17)

According to the tracking information of the business agency, the main quotation range of magnesium ingots in fugu (99.9%) is 13700-13800 yuan / ton; that of magnesium ingots in Ningxia (99.9%) is 13750-13850 yuan / ton; that of magnesium ingots in Taiyuan (99.9%) is 13850-14000 yuan / ton; that of magnesium ingots in Wenxi (99.9%) is 13900-14000 yuan / ton.


At present, the market is weak, the actual trading is not much, just need to purchase mainly, the market inquiry is mostly. On the one hand, due to the small number of orders of traders, it is prudent to enter the market for procurement; on the other hand, due to the general decline of bulk commodities, the factory’s willingness to store goods is moving down, and small-scale procurement is the main thing.



Expected market outlook


The downstream demand is weak. At present, the price of magnesium ingot is back to normal. It is expected that it will run stably in the near future, and pay attention to the change of downstream purchase rhythm in the later stage.


Polyaluminium chloride market is stable weakly

Commodity index: on March 26, the polyaluminium chloride commodity index was 104.73, unchanged from yesterday, down 3.93% from 109.01 (2019-08-28), the highest point in the cycle, and up 3.80% from 100.90, the lowest point on December 19, 2019. (Note: cycle refers to 2019-04-01 till now)



Quotation: according to the monitoring data of business agency (100ppi. Com), in March 2020, poly aluminum chloride (solid, content ≥ 28%) manufacturers returned to work in good condition. The mainstream quotation in the domestic market: poly aluminum chloride solid (industrial level, content ≥ 28%) with tax quotation of about 1750-2200 yuan / ton, liquid (industrial level, content 10% – 12%) with tax quotation of about 350-450 yuan / ton, some of which have been reduced, The decrease range of solid is about 100-150 yuan / ton, and that of liquid is about 50 yuan / ton.


Upstream and downstream: according to the data of business agency, the main factory price of hydrochloric acid in North China rose slightly this week. The quotation of Dezhou Maihua is 60 yuan / ton, with a slight increase of 10 yuan / ton; the quotation of Jinan Yuanfei is 450 yuan / ton, with a temporary stability; the quotation of Shanxi Wenshui is 230 yuan / ton, with a temporary stability; the quotation of Dezhou Shihua is 200 yuan / ton, with a temporary stability; the quotation of Taiyuan kunshengda is 420 yuan / ton, with a temporary stability; the actual transaction price is subject to negotiation. The upstream liquid chlorine market is temporarily stable, the downstream procurement enthusiasm is general, and the supply of hydrochloric acid is normal.



Downstream: it is reported that most of the downstream water treatment projects are in the negotiation stage, and it will take some time for them to return to normal.


Industry: in late July 2019, recently, the water purification and environmental protection enterprises in Yong’an Road sub district office of Gongyi City, Henan Province received the notice of production suspension, which requires that: according to the analysis of the city’s environmental pollution and future pollution weather, the municipal office requires all deep treatment enterprises to stop production and treatment before acceptance, and can resume production after dispatching or acceptance according to the office. The production was resumed for ten days in August and stopped again on 15th. According to the manufacturer, the shutdown was more affected by the National Games held in Zhengzhou on September 8th. The local environmental protection inspection was strict, and all local enterprises in Gongyi were required to stop production for environmental protection treatment and maintenance. After the National Games on September 8, the local manufacturers did not receive the notice of commencement immediately, and the strict inspection of environmental protection was in progress. In late September, local manufacturers in Gongyi began to resume production one after another, and the supply of goods gradually returned to normal. On December 19, Gongyi, the main production area of Henan Province, issued an emergency notice, requiring all enterprises to stop production and all goods transportation from now until January 1, 2020 in accordance with the spirit of the 16th scheduling meeting of Gongyi City for environmental pollution control. Zhengzhou municipal leaders will lead the supervision group to continuously supervise and inspect the implementation of management and control. If it is found that the implementation is not in place, the person in charge of the enterprise and the truck driver will be detained. The enterprise will be included in the blacklist of integrity, and the enterprise will be subject to top-level punishment. This notice is very strict for manufacturers and freight requirements, and manufacturers should stop production. During the Spring Festival holiday from January to February 20, 2020, the relevant enterprises in the main production area stop production and delay to return to work. After February 20, the manufacturers in the main production area returned to work one after another. At present, the logistics gradually recovered in March, and the transportation cost has been normal. Before the year, the inventory was still in consumption. Some enterprises with higher inventory had slightly lower prices under the current weak demand situation.


Aftermarket forecast: the analysis of the business community believes that the current manufacturers start well, the downstream demand is light, if the market is weak. The existing supply of the manufacturer is sufficient. In the case of high inventory in the early stage, slight changes in upstream costs and general demand, the market of polyaluminium in the future will be stable and weak, and some manufacturers have certain price concessions.