Caixin Futures: Geopolitical Premium Remains Volatile, Methanol Trades at High Levels, Crude Oil and Fuel Oil Continue Strong Trend

⑴ Crude oil is experiencing high-level fluctuations as the United States continues its bombing of Iran and maintains a maritime blockade. The strait remains closed, and the Houthis have announced a maritime ban on Saudi Arabia, posing a threat to navigation in the Red Sea. The conflict between both sides is escalating without reversal, making it difficult for the situation to cool down significantly in the short term. Petrochemical products are likely to continue fluctuating at high levels in the short run.⑵ Fuel oil is also seeing high-level fluctuations. The United States has taken action against Iran in response to attacks on merchant ships, with geopolitical tensions pushing fuel oil prices to rebound. The market previously priced in the escalation with relative restraint, but with the US re-blockading the Strait of Hormuz, short-term supply constraints have clearly intensified. Expect high-level market fluctuations over the short term.⑶ Bitumen prices remain volatile at high levels. Today, the price of Shandong 70# heavy-duty bitumen is 4,380 yuan per ton, a decrease of 5 yuan compared to the previous period. Outbound sales at high prices were somewhat lackluster, and some quotes came under mild downward pressure. In August, the total production of domestic local bitumen refineries was 870,000 tons, an increase of 154,000 tons month-on-month or a growth of 21.5%. This week, capacity utilization was 21.3%, up 0.9% compared to the previous period.⑷ In terms of inventory, as of July 20, inventories at 54 domestic sample bitumen plants reached 782,000 tons, an increase of 1.0% compared to July 16, and up 3.9% year-on-year. Inventories at 104 social depots were 992,000 tons, down 1.2% from July 16, and down 46.6% year-on-year. Both supply and demand for bitumen remain weak, and inventories are at low levels. The heightened US-Iran tensions remain the main trading logic, and high-level volatility is expected in the short term.⑸ The glass market remains at a low fluctuation level. The North China market is mainly stable with decent transactions and moderate restocking downstream. East China saw narrow adjustments, with most companies maintaining stable prices, but demand remains weak. Last week, float glass inventories were 76.107 million heavy boxes, up 107,000 heavy boxes or 0.14% week-on-week, and an increase of 17.2% year-on-year. Technological upgrades have raised costs, keeping supply low, and recently, additions of new cold lines have supported a short-term rebound. However, demand expectations remain weak, and medium-term supply-demand pressure persists, so low-level market fluctuations are expected.⑹ A bearish outlook for soda ash: The domestic market is stable but lackluster, with prices relatively firm at the bottom. Few enterprises are undergoing maintenance recently, so supply remains high with daily output approaching 110,000 tons and a capacity utilization rate of 80.67%. This week, total soda ash producer inventories were 1.7723 million tons, an increase of 17,900 tons compared to last Thursday, or 1.02% higher. The medium-term outlook of high supply and weak demand is unlikely to change, so expect a bearish, fluctuating market.⑺ Methanol: net long positions reduced. Today, Taicang spot price is 2,702, down 3. Northern Inner Mongolia prices remain flat at 2,342.5. During the day, prices first weakened and then rebounded slightly. Transaction focus shifted slightly lower at the ports, with bargain hunting from just-in-time buyers and a slightly stronger basis during the day. This week, inventory at sample methanol producers was 350,300 tons, down 30,600 tons from the last period; port inventory totaled 548,700 tons, up 147,200 tons from the last period. At the start of the week, a sharp rally was driven by rising geopolitical tensions, but after Iran stated that a mediator offered a 10-day ceasefire proposal, the geopolitical outlook retreated. With inventories recovering at the margin and prices rising toward resistance levels, high-volatility trading in methanol may intensify.