SunSirs: Energy, DME Market Keeps Rising before Spring Festival, or It Ushers in ‘Spring’ later?

According to the data monitoring of SunSirs, from the beginning of December 2019, the domestic DME Market has shown an upward trend of fluctuation. The increase of the domestic DME Market before the Spring Festival is relatively obvious. On January 5, the average ex-factory price of domestic DME was 3,063.33 RMB/ ton, and on January 21, the average price was 3,340 RMB/ ton, only about half a month, the price rose by 9.03%, 2.04% higher than the same period last year.

Looking at the data in 2019, the market price of DME is lower than the overall focus of previous years, and the trend is relatively flat. However, in 2020, the DME market opened an upward channel, and the factory price continued to rise before the Spring Festival, ushering in a "good start". Take Xinlianxin in Henan Province as an example, on January 2, the price of Xinlianxin DME was 3,150 RMB/ ton, and on January 21, it was 3,520 RMB/ ton, during which the price increased 370 RMB/ ton.

At the end of December, Saudi Aramco's CP price rose sharply in January, which was pushed up by international crude oil, supporting the domestic gas price. At the beginning of January, the inventory of LPG manufacturers was controlled as a whole. Petrochemical manufacturers raised their prices continuously, while other manufacturers kept pace with the increase. The civil market rose by 6.55% in seven days. During this period, the market of DME was boosted by favorable conditions, and the price was continuously pushed up. But then the trend of gas and ether appeared obvious deviation, gas price was mainly downward, and ether price continued to rise. After the wide upward trend, the price of LPG for civil use rose to a high level, the terminal receiving capacity was limited, and the resistance increased. The downstream consumed more early-stage inventory and turned to wait-and-see, which led to the weakening of the market transaction atmosphere, the manufacturer's shipment was blocked, and the inventory gradually increased. And near the Spring Festival, the manufacturer's inventory demand had to reduce the price and give priority to profit shipment. However, due to the continuous shutdown of many factories, the market of DME with low operating rate continues to decline, the market supply is limited, the pressure of manufacturers' shipment is alleviated continuously, and the demand of terminal stock before the festival, so even if the gas price falls, the ether price still keeps rising. In terms of cost methanol, the trend of DME has been on the rise. The strong rise and fall of futures has boosted the market mentality. Some regions have actively pushed up, and trading has continued smoothly, which has also brought some support to the DME market.

Market Forecast

According to SunSirs, at present, transportation during the Spring Festival holiday is limited, most traders have closed the market, the market activity has declined, and the methanol market may be stable in the later period. However, the LPG market continued to decline, and the international crude oil also fell mainly. In the short term, the LPG market has no good support, so it is difficult to reverse the decline. However, there are obvious deviations in the trend of gas and ether, the price difference between gas and ether keeps getting closer, and the good support of DME market is limited. After the Spring Festival, with the start-up of enterprises and the increase of market supply, the sales pressure of DME still exists. In most regions, it is strictly checked that DME is mixed with LPG. The mixed market is not optimistic, the demand for DME continues to narrow, and the market is still severe in 2020. The adjustment is expected to be stable and stable in the short term, and the long-term decline is still possible.

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