According to the report of Japan Economic News on January 15, it is estimated that the U.S. crude oil production in 2018 leaped to the top in the world after 45 years. Driven by shale oil, U.S. crude oil production has more than doubled in 10 years, while dependence on imports has fallen to its lowest level in 30 years. The United States had previously relied on the Middle East in terms of crude oil supply, but as its production increased, its active participation in Middle East affairs might also decline. On the contrary, the “U.S. priority” foreign and security policies would be strengthened. The transformation of the United States into a net exporter of crude oil that exports more than imports is also imminent, and the world’s energy geopolitics may change.

Estimates from the U.S. Energy Information Agency (EIA) and industry show that crude oil production in the United States averaged about 10.9 million barrels a day in 2018, an increase of about 20% over the previous year. The United States ranked third in 2017, but Saudi Arabia, which surpassed second in September 2018, and Russia, which ranked first, changed their power structure completely. Shale oil is still profitable below $50 a barrel because of the lower cost of technological innovation.

The structure of the U.S. dependence on foreign oil is changing as production increases. Net imports minus exports of crude oil account for less than 30% of U.S. domestic consumption in 2018, which is likely to reach the lowest level since 1988. This proportion hovered between 4 and 50% after the mid-1990s, when demand expanded significantly.

On the one hand, U.S. imports from the Organization of Petroleum Exporting Countries (OPEC) fell to about 50% of its recent peak (2008), the lowest level in 31 years. “The importance of the Middle East has declined and will no longer interfere in Middle East affairs at any cost,” said Takeshi Ueno, a senior economist at Japan’s Hiroshi Foundation Research Institute.

One of the reasons why the United States has long played the role of “world police” is to ensure a stable supply of energy. The fourth Middle East War in 1973, when the decline in domestic oil resources became evident, led to the oil crisis, which struck the world economy as prices rose rapidly.

To this end, in the Middle East, which is heavily dependent on crude oil, the United States led actions to maintain regional order, such as the 1991 Gulf War. But in December 2018, the United States announced its withdrawal from Syria, where the civil war is still ongoing. From the point of view of energy security, the active participation of the United States in Middle East affairs has significantly weakened.

On the other hand, the United States banned crude oil exports because of lessons learned from the oil crisis, but lifted the ban in 2015. After that, the export of crude oil expanded rapidly. By the last week of November 2018, its exports expanded to the fourth largest in the world after Saudi Arabia and Russia.

There are many opinions in the market that the sense of existence in the United States will be a factor to pull down the market. Lotte Securities commodity analyst Jeshi Yoshida said, “OPEC’s”magic power”of raising prices through production cuts will be weakened”.

The world crude oil market is hovering around $50 a barrel. If the United States maintains its output growth at a faster than expected rate, it will restrain the rise in oil prices (Takashi Noguchi, chief economist of Japan’s Petroleum, Natural Gas and Metal Mineral Resources Agency), which may shake the ruling foundations of Russia and the Middle East, which are financially dependent on crude oil revenues.

U.S. exports of crude oil and petroleum products exceeded imports once a week in November 2018, and net exports for the first time since 1991, which can be traced back to the same standards. Shale oil production fluctuates due to the financing environment, but Daniel Eugene, a well-known analyst, predicts that by the early 1920s, [the United States] will also become a net exporter throughout the year.

Trump’s political power struggles to gain new hegemony by taking the world’s energy supply as its source. U.S. crude oil import and export revenue and expenditure in 2017 was negative 110 billion U.S. dollars. It accounts for 14% of the overall trade deficit in goods. The United States is considering reducing the trade deficit by expanding energy exports. The United States has become a net exporter of natural gas in 2017. The United States has begun to move from a big energy consumer to a big exporter, or will bring about changes in the world political structure based on resources.

According to LME data, on January 14, 2019, the total stock of copper metal was 133,700 tonnes; the total stock of aluminum metal was 1,294,050 tonnes, an increase of 9,325 tonnes per day; and the total stock of aluminum alloy was 10,400 tonnes.

Australia’s LNG exports grew 23% in 2018, bringing total exports to a record 69.5 million tons and export revenue to a 68% increase of about A$43.3 billion, according to data released recently by the Australian Energy Consulting Company Energy Survey. According to the report, with the completion and commissioning of large-scale liquefied natural gas projects in Northwest Australia, Australia’s liquefied natural gas exports will continue to grow strongly in 2019.

LNG is one of Australia’s main export earning commodities, second only to coal and iron ore. At present, Australia has surpassed Qatar as the world’s largest exporter of liquefied natural gas and China’s largest supplier of liquefied natural gas. As of November 2018, 46% of China’s LNG imports came from Australia. The huge energy demand in the Chinese market stimulated Australia to expand LNG investment and export.

Australia has a huge potential for natural gas development. In recent years, the development of liquefied natural gas (LNG) has been booming. Domestic and foreign investment has exceeded 200 billion US dollars. At the end of 2018, two LNG projects in Darwin will cost US$45 billion to put into operation, and their production will increase dramatically in the next two years. Eastern Australia’s gas-producing areas are affected by domestic energy supply constraints, and production is far below capacity, so export growth is not significant.

With the deepening of China’s supply-side reform of electrolytic aluminium and the remarkable increase of alumina production capacity abroad, the era of high-profit alumina industry is expected to end without emerging countries replacing the decline in aluminium demand caused by China’s economic slowdown.

With the production process of alumina unchanged for decades, only the comprehensive utilization of red mud, known as a worldwide problem, is expected to carry the banner of the next profit outlet.

A Brief Introduction to Red Mud

Each ton of alumina produced about 1.5 tons of red mud, particle diameter 0.088-0.25 mm, specific gravity 2.7-2.9, bulk density 0.8-1.0, melting point 1200-1250 C. The composition of red mud is shown in the table below.

At present, Bayer process is widely used in the production of alumina in China. The red mud of Bayer process is characterized by high content of iron, aluminium and alkali.

Typical Cases of Red Mud Comprehensive Utilization in Alumina Enterprises

1. China Aluminum Shandong Branch: The available data are that the comprehensive utilization rate of red mud is 25% by 2016, and the total consumption of red mud is 12 million, which is the highest utilization rate of alumina enterprises in China at present. Henan Province Aluminum Industry Transition Development Action Plan (2018-2020) clearly put forward that the comprehensive utilization rate of red mud will reach 10% by 2020. There will be no harm if there is no contrast. The comprehensive utilization rate of red mud in China is too low. The main uses of red mud are to prepare new desulfurizer technology for coal combustion, high grade cement, highway roadbed, brick making and water purifying agent.

2. Weiqiao Group: In 2018, 20,000 tons of red mud were used on the 5.3 km Subgrade of Binzhou section of Jiqing Expressway. It is estimated that 200,000 red mud can be consumed per kilometer of highway, 60,000 tons of red mud can be consumed on Provincial Highway and 20,000 tons of red mud can be consumed on Municipal road. For countries with huge mileage of highway in China, the future market prospects are broad.

3. Typical Cases of Comprehensive Utilization of Red Mud by Social Forces

On December 31, 2018, Shandong Satellite Television broadcasted a news about the large-scale production of permeable bricks (70,000 tons of red mud per year) by Zibo Tianzhirun Ecological Technology Co., Ltd. The company’s red mud permeable brick project red mud blending rate as high as 90%, successfully selected in 2018 Shandong Province, ten innovative achievements of circular economy. The owner of the company invested more than 30 million yuan and finally gambled on the only two houses. Fortunately, the company succeeded. It is a worldwide problem to know.

It is not only reminiscent that Inner Mongolia enterprises have spent tens of billions of dollars to break through the difficulty of producing alumina from fly ash, but there has been no breakthrough so far.

IV. Suggestions on Comprehensive Utilization of Red Mud

At present, red mud is used to produce cement, roadbed and permeable bricks, each of which has its own advantages and disadvantages. The production technology of cement is mature, but there are cement factories nearby and the consumption of roadbed is large. However, the future demand for highways in economically developed areas is limited. The production of permeable bricks can be popularized throughout the country. The disadvantage is that the sales radius is less than 800 kilometers.

Generally speaking, the comprehensive utilization rate of red mud in China is very low. Although the utilization rate of red mud in China is not worse than that in other countries, we can not compare with foreign countries in the future. The era of self-surpassing in China’s alumina industry has arrived. We have seized the profit outlet of red mud comprehensive utilization and will reshape the status of enterprises in the alumina industry.

Price Trend

According to the price monitoring of business associations, as of January 10, the average price of methanol in domestic market was 2288 yuan/ton. The overall market area was adjusted, and the price fell 33.70% compared with the same period last year.

II. Market Analysis

Products: China’s methanol market continued to rise. Trading in Northwest China is good and the market is strong. Goods around Bohai Sea and Central China are still good and rising steadily. Trading in Huaihai has improved with a slight increase. Futures are tidied up, and the port market has risen accordingly. Enterprises in Northwest China are still able to deliver goods. Some enterprises have stopped selling, and some of them have delivered more than planned. The mentality of manufacturers is firm. The demand for inventory and replenishment in some parts of the Mainland, together with the recent trend of futures, supports the mindset of the traders, and the overall turnover of the market is stable and the atmosphere is acceptable. On the port side, futures opened high, spot quotation was firm, buying cautiously, negotiation was general, and overall spot volume was flat.

Industry chain: formaldehyde: the weather turned cold, downstream slabs started to decline, the demand for formaldehyde was light; raw material methanol rebounded recently, cost support is still acceptable, Shandong formaldehyde finishing wait-and-see trend. Now Linyi is around 1050-1060 yuan/ton, Zibo and its surrounding areas around 1200-1300 yuan/ton. Acetic acid: The domestic glacial acetic acid market has fallen sharply. The downstream acetate, chloroacetic acid and vinyl acetate are not good, and the intention of pre-season stock is general. The local storage pressure of acetic acid enterprises is slightly obvious, and considering the Spring Festival holidays, the enterprises have a higher intention to arrange goods within a week, so the local real unit price is lower in a day. However, the recent performance of methanol raw material, acetic acid profits continue to compress, so acetic acid is expected to continue downward space is limited. Dimethyl ether: The market supply is still tight, the overall inventory of enterprises is controllable, the short-term mentality is still strong, and the short-term domestic mainstream price trend of dimethyl ether is still bullish.

3. Future Market Forecast

Business Cooperatives Viewpoint: On the positive side, the raw material side: although natural gas in the northern heating season has not been expected to be tense in recent years, the seasonal supply and demand situation from coal, natural gas and other energy sources still has some support; Freight: Freight has been rising continuously in some areas in recent years, coupled with rain and snow weather in some parts of the country, transportation constraints, transportation costs in some areas have increased; Inventory: by the holiday bureau. Due to the tight influence of shipping closure and storage capacity, the overall unloading speed is slower, the inventory of East China Port is reduced, and the arrival of ship cargo in Ningbo area is delayed due to the influence of earlier closure, and the saleable volume is greatly reduced. On the short side, the external market: the recent external market negotiations are still weak and prices remain low, especially in Europe, where prices continue to decline slightly, and the pace of delivery in Iran needs to be paid attention to; demand: the current domestic environmental protection constraints, coupled with the traditional off-season in winter, the downstream industry still shows poor start, the digestion of methanol at the raw material end is normal; supply: recent Inner Mongolia, Gansu and Shanxi Parking and load reduction devices in other places are mostly restored. The supply of methanol resources in some areas has been enlarged, and the supply of methanol in the main production areas has shown an increasing trend. Methanol analysts from business associations predict that crude oil is on a good trend in the near future, and the domestic methanol market is on the strong side in the short term. Later, we still need to pay attention to domestic methanol plant restart, downstream delivery, port inventory, freight situation and futures trend, and suggest cautious operation.