Methanol

Methanol Market Dynamics Intelligence, Analysis, and Forecast

I. Recent Market Dynamics
(A) Price Trends
- Domestic Market: In the first half of June 2026, constrained by persistently low import volumes, tradable methanol supply along China’s coast remained tight. Supported by restocking demand, the basis surged rapidly, driving domestic methanol prices modestly higher. However, at the beginning of this week, market sentiment shifted swiftly following news regarding geopolitical developments and changes in critical international shipping lanes, prompting expectations of structural shifts in supply-demand dynamics. Consequently, methanol prices declined sharply. By end-June, average prices stood at: RMB 1,999/ton in Northwest Inner Mongolia (up 2.78% MoM); RMB 2,417/ton in East China’s Taicang port (down 5.10% MoM); and RMB 2,185/ton in Central China’s Henan Province (up 0.55% MoM).
- International Market: In July 2025, global methanol prices traded with volatility. In Europe, weak demand after conclusion of Q3 contract negotiations led to falling prices amid mounting inventory pressure; however, prices rebounded modestly at month-end as inventory pressures eased. In the U.S., prices held relatively firm during mid-to-late July, supported by purchases from major buyers. In China’s coastal markets, prices were subdued in early-to-mid July due to weak apparent import demand and elevated import expectations; prices rebounded slightly in mid-to-late July under macroeconomic influences—but gains remained limited.

(B) Supply Situation
- Domestic Production: China’s methanol output in June 2025 is estimated at 7.66 million tons—up 290,000 tons MoM—driven by high profitability, pushing plant utilization rates to their highest level of the year. In July 2025, domestic production is expected to remain elevated; although some regional facilities are scheduled for maintenance, the aggregate downtime volume is smaller than in June. Most new capacities coming online in 2026 are integrated with downstream derivatives, limiting net incremental supply. Nevertheless, additional capacity is still slated for commissioning in 2026, including Baofeng’s 2.8-million-ton/year and Zhongmei Yulin’s 2.2-million-ton/year plants.
- Imports: From January to November 2025, China’s cumulative methanol imports totaled 12.6969 million tons, up 2.60% YoY. December imports are forecast to rise further, bringing full-year 2025 imports to an estimated 14.28 million tons—an increase of 5.9% YoY. July 2025 imports are projected to remain near the high level of ~1.2 million tons; although Iranian plant outages reduced arrivals, shipments from existing Iranian inventories in June—as well as increased non-Iranian cargoes—largely offset this decline. Looking ahead to 2026, Iranian methanol exports to China are expected to grow further, driven by new capacity expansions and restrictions on Indian imports of Iranian methanol under U.S. sanctions. Concurrently, Russia’s share of China’s methanol imports may rise further. Overall, import growth in 2026 is projected at 6–7%.

(C) Demand Situation
- Downstream Operating Rates: In June 2025, the average operating rate of methanol-to-olefins (MTO) plants rose 1.55 percentage points to ~79.65%; weighted average operating rates across traditional downstream sectors increased 1.84 percentage points to ~50.68%. In July 2025, MTO operations are expected to soften: a key Henan-based MTO plant shut down at end-June, and a major Nanjing facility has announced planned maintenance. For traditional downstream sectors, formaldehyde and dimethyl ether (DME) operating rates are expected to remain broadly stable; acetic acid plants are running at high utilization (>90%), with no imminent maintenance reported. Attention should be paid to the ramp-up pace of two newly commissioned acetic acid plants—one in Shanghai and one in Xinjiang.
- Emerging Demand: External-purchase MTO plants show notably stronger demand growth, while new capacity additions across traditional downstream sectors will provide definite demand increments for methanol. Domestically, MTO capacity expansion remains robust in 2025: an estimated 3.3 million tons of new capacity is expected to come online, lifting total national MTO capacity to 23.395 million tons—a YoY growth of 16.4%. Notably, Lianhong Gerun’s 1.3-million-ton/year MTO plant in Shandong commenced operations in December 2025. With no integrated methanol production, this facility will generate annual external methanol procurement demand of 3.458 million tons.

(D) Inventory Levels
- Port Inventories: As of end-July 2025, methanol port inventories stood at 808,400 tons—up 19.41% MoM—continuing a trend of accumulation. In July, typhoon-related port closures hampered unloading efficiency in certain coastal areas; however, diversification of foreign vessel discharge zones significantly increased overall unloading volumes. Meanwhile, downstream demand remained sluggish, leading to continued accumulation in the East China region. In South China, both imported and domestic shipments increased markedly, while cargo withdrawals from major storage terminals contracted, resulting in further inventory buildup amid weak downstream demand.
- Producer Inventories: Since June 2025, producer/factory inventories have remained healthy and have been actively drawn down, now sitting at year-on-year lows.

II. Analysis & Assessment
(A) Supply Side
Domestic methanol supply is influenced jointly by plant maintenance and new capacity commissioning. While short-term supply reductions occur during maintenance periods, long-term supply will expand steadily as new capacity gradually comes online. On the import front, geopolitical developments and disruptions to critical maritime logistics corridors significantly impact import volumes. Should these key waterways reopen smoothly, import recovery from July onward is likely to accelerate, adding upward pressure on domestic supply.

(B) Demand Side
Growing demand from externally-sourced MTO plants and new capacity additions across traditional downstream sectors provide fundamental support for methanol demand. However, most downstream industries currently operate at losses, potentially dampening operational enthusiasm and procurement willingness—thus imposing constraints on demand growth.

(C) Cost Structure
Coal constitutes the primary cost input for coal-based methanol production. In 2025, coal market oversupply conditions are expected to ease, accelerating inventory drawdown and strengthening cost support. Yet overall coal price increases are anticipated to lag behind methanol price gains, resulting in improved margins for coal-based methanol producers. Nevertheless, future coal price volatility remains a potential risk factor influencing both methanol production costs and pricing.

III. Outlook
(A) Short-Term (July 2025)
Domestic methanol prices are expected to trade sideways with volatility. On the supply side, output remains elevated; though some facilities are undergoing maintenance, resumption volumes outweigh maintenance-related losses. Import volumes are forecast to stay near historically high levels. On the demand side, MTO operating rates are expected to decline, while traditional downstream rates hold steady—with acetic acid sector capacity additions providing upside potential. Port inventories continue accumulating, whereas producer inventories remain healthy. Overall, supply-demand imbalances are not pronounced, supporting a range-bound price outlook. That said, if all scheduled maintenance events materialize as planned, localized supply contraction could temporarily lift prices.

(B) Medium-to-Long Term (Post-July 2025)
Should critical international shipping lanes resume normal operations, import recovery from July onward is likely to accelerate, increasing domestic supply and exerting downward pressure on methanol prices. Concurrently, downstream profitability and raw material inventory levels will interact dynamically, prompting continuous adjustments and rebalancing of supply-demand fundamentals. Key monitoring variables include: geopolitical developments and restoration of international logistics channels; downstream operating rates and procurement behavior; and coal price fluctuations.