The central bank lowered the prospective methanol downgrade

Market Review: On June 10, the main methanol contract ME1409 opened at 2545, reached a high of 2552, dropped to a low of 2531, and closed at 2544. Compared to the previous day's settlement price, it rose by 0.24%. Trading volume increased by 122 lots to 41,200 contracts, while open interest climbed by 842 lots to 50,600 contracts. The market showed some volatility, with prices struggling to gain momentum despite the initial rise.

Fundamental Analysis: Internationally, on June 9, the FOB Rotterdam methanol price closed at 368.53–369.89 USD/ton, down by 1.47 USD/ton from the previous day. In the U.S., FOB Gulf methanol closed at 365.3–366.97 USD/ton, up by 1.66 USD/ton. Prices in Europe and the U.S. remained relatively stable compared to the past two days. Additionally, Brunei’s BMC methanol plant in Sungai Ridge Industrial Park resumed operations after a 2-3 day shutdown, indicating a slight recovery in supply.

Macro-Level News: On June 9, the central bank announced that starting June 16, 2014, it would reduce the deposit reserve ratio for commercial banks meeting prudent operation standards and achieving a certain percentage of “three rural” and small-to-micro enterprises. The rate cut was 0.5%, aimed at guiding financial institutions to optimize credit structures and support economic growth while promoting restructuring. This move signals a shift from a tight monetary policy to a more flexible one, suggesting potential improvement in the economy. However, the third-quarter outlook remains weak, with only moderate growth expected.

Domestic Spot Market: On June 10, methanol prices in eastern and southwestern China were relatively stable. Mainstream prices in Taicang were between 2530–2540 CNY/ton, while Jiangyin and Changzhou saw prices at 2540–2550 CNY/ton. In Central China, Northwest, and Northeast regions, prices continued to decline, with weak trading activity and manufacturers expressing pessimism. For instance, Henan Xinxiang’s factory prices stabilized at 2280–2300 CNY/ton, while Inner Mongolia’s factories quoted 2050–2150 CNY/ton, with some even dropping to 2120 CNY/ton. In South and North China, prices declined moderately, with Guangdong traders offering 2520–2550 CNY/ton, and Shanxi Linfen’s cash price at 2100–2120 CNY/ton. Jincheng and Yuncheng areas accepted ex-factory prices around 2230–2250 CNY/ton.

Operational Updates: Several key methanol facilities are undergoing maintenance or repairs. Mengda’s 600,000-ton unit will be inspected for a week starting June 5. Boyuan’s facility is under inspection, and Xineng’s 600,000-ton unit is scheduled for a one-month shutdown starting in early July. Jinchengtai’s 300,000-ton unit will also be offline for a month from late June. Gansu Huating’s 600,000-ton unit is expected to be repaired for 15 days starting today, while Bluestar’s restart date remains uncertain.

Trading Recommendations: On June 10, methanol opened higher but quickly fell after rising 20 points, hitting a new low. A minor rebound occurred in the afternoon, but the lack of buying pressure led to a weak close. From a technical perspective, methanol has been testing new lows, with limited support and increasing pressure near the 5-day moving average. The consolidation range has shifted from 2550–2580 to 2530–2570. Despite macroeconomic improvements and the central bank’s targeted rate cut, the market continues to trend lower, showing persistent weakness. Investors are advised to stay cautious and avoid the market for now. Active traders may consider holding small short positions near the 2560 level, with a stop-loss at 2580, focusing on day trading. Monitoring the 2550 level is crucial for potential stabilization.