Caixin Futures Energy and Chemical Sector Strategy: Geopolitical Conflicts Dominate, Crude Oil and Methanol Remain Strong

⑴ Crude Oil: The scope of attacks on Middle Eastern infrastructure and oil facilities has expanded, while the US and Iran remain in a standoff, leading to significant uncertainty in the situation and little sign of short-term easing. The energy and chemical sector continues to experience high volatility at elevated levels, and close attention should be paid to developments in Iran. ⑵ Fuel Oil: Middle Eastern oil-producing countries have cut production, and domestic reliance on high-sulfur fuel oil imports remains high, with Iranian imports accounting for 20%. With the Strait of Hormuz not fully open, the supply gap is unlikely to recover in the short term, and prices are expected to fluctuate strongly at high levels. ⑶ Glass: This week, one production line each in South China and Southwest China was shut down for maintenance, reducing daily melting capacity to 145,800 tons. Downstream orders are recovering slowly, and buyers remain cautious. Low supply and seasonal demand expectations are supporting prices, which are expected to fluctuate within a wide range. ⑷ Soda Ash: This week’s output was 818,100 tons, with more maintenance scheduled for next week, and the operating rate is expected to drop to around 82%. Downstream purchases are made as needed, and inventories are decreasing. Energy costs provide support, but medium-term supply remains high, resulting in weak momentum. Considering marginal reductions due to maintenance, it is not advisable to be overly bearish for now, and a wide fluctuation is expected. ⑸ Caustic Soda: Tight raw material supply has led some companies to reduce production, and overseas facilities have also been shut down, resulting in positive market sentiment. This week, liquid caustic soda sample companies’ inventories decreased by 6.28% week-on-week, easing inventory pressure. However, with significant premiums in the futures market, if the geopolitical situation eases, volatility will increase, and the market is expected to become more turbulent. ⑹ Methanol: Concerns over reduced imports due to worsening geopolitical conflicts continue to intensify, with port inventories decreasing by 51,100 tons this week. The spot market continues its strong upward trend, with Taicang spot prices rising to 3,145 yuan. With delayed and reduced import supplies, methanol is expected to continue fluctuating with a strong bias.