SunSirs: Methanol Spot Market Analysis: Geopolitical Disruptions Subside as Supply-Demand Dynamics Intensify

From yesterday (May 18) through today (May 19), the methanol spot market exhibited a trend of initial stability followed by a rise, characterized by regional price divergence. With geopolitical risk premiums subsiding—counterbalanced by support from high domestic plant operating rates and low port inventories—prices trended upward amidst volatility. The price spread between East China ports and the Northwest production region remained at a high level; overall trading volume was moderate, with the market primarily driven by immediate, essential demand.

I. Spot Market Performance (May 18–19)

SunSirs Benchmark Price: On May 19, the benchmark spot price for methanol stood at 3,204.17 RMB/ton, representing a 2.12% increase compared to May 18 (3,137.50 RMB/ton). Consequently, the cumulative decline for the month-to-date narrowed to 2.8%.

Regional Spot Quotes (May 19)

East China Ports (Taicang): 3,180–3,220 RMB/ton; up 30 RMB/ton from yesterday, though trading activity remained relatively light.

Southern Shandong Region: 3,050–3,080 RMB/ton; ex-factory prices held steady, with downstream buyers purchasing strictly on an as-needed basis.

Inner Mongolia Production Region: 2,750–2,780 RMB/ton; quotes remained firm, bolstered by cost-side support.

South China (Guangzhou): 3,200–3,230 RMB/ton; inventories remained relatively low, and prices stabilized at a high level.

II. Domestic and International Capacity, Production, and Import Volumes

Domestic Supply

By 2026, total domestic methanol production capacity is projected to reach approximately 112 million tons—a year-on-year increase of 5%—with the majority of this new capacity being integrated with Methanol-to-Olefins (MTO) facilities. In May, the operating rate of domestic methanol plants remained at a high level of 91%. Monthly production volume stood at approximately 2.06 million tons, representing a slight month-on-month increase; as plant maintenance activities were concentrated in the first half of the month, short-term supply is expected to remain relatively ample.

International Supply and Import Volumes

Total global methanol production capacity stands at approximately 80 million tons, with the Middle East accounting for over 70% of this total. Iranian production facilities are gradually resuming operations following geopolitical disruptions; consequently, the international capacity utilization rate rebounded to 53.3% in May.

Regarding imports, volumes declined in March and April due to geopolitical conflicts. Arrivals in May are projected at 600,000 tons, remaining flat month-on-month. Cumulative imports from January to April totaled approximately 2.2 million tons—a 12% year-on-year decrease—with this contraction in imports supporting inventory reduction at ports.

III. Port Inventory

As of mid-May, national methanol port inventory stood at 878,600 tons—a month-on-month decrease of 37,000 tons and a year-on-year decrease of 25%—marking a new low for the year. Specifically, inventory in East China totaled 620,000 tons, while South China held 258,600 tons. With only approximately 280,000 tons of spot cargo currently available for circulation at ports, these low inventory levels provide strong underlying support for prices.

IV. Factors Influencing Prices

1. Cost Side

Raw coal prices are fluctuating at high levels, with mainstream thermal coal quoted between 850 and 880 RMB/ton. Consequently, the production cost for coal-based methanol remains within the 2,600–2,700 RMB/ton range, providing a floor of support for prices. Natural gas prices remain stable, resulting in limited cost fluctuations for gas-based methanol production.

2. Geopolitics

The situation in the Middle East has eased, leading to the resumption of operations at Iranian facilities and the dissipation of the "geopolitical premium"; this presents a short-term bearish factor for the market. However, uncertainties regarding navigation through the Strait of Hormuz persist, and the recovery of import volumes remains slow, thereby limiting the potential downside for prices.

3. Supply and Demand Dynamics

The combination of high domestic operating rates and low import volumes has resulted in a relatively tight supply situation. Downstream sectors exhibit steady "rigid demand" (essential consumption) but lack any explosive growth in demand; consequently, the market is currently in a state of "weak equilibrium" between supply and demand, leading to price fluctuations.

4. Inventory and Logistics

Low port inventory levels continue to provide a price floor. Furthermore, high logistics costs for transporting goods from production regions to ports have kept regional price spreads at elevated levels, thereby restricting inter-regional cargo flows.

V. Downstream Sales and Procurement Activity

Downstream Demand Structure

MTO (Methanol-to-Olefins) constitutes the largest downstream sector, accounting for 45% of demand. Traditional downstream sectors (such as formaldehyde, acetic acid, and MTBE) account for 40%, while fuel applications and other miscellaneous uses make up the remaining 15%. Procurement and Sales Overview

MTO: Operating rates remain at a high level of **85%**. Recovering profit margins are driving essential procurement demand, keeping purchasing activity steady. Product sales are robust, and elevated olefin prices continue to underpin MTO profitability.

Traditional Downstream Sectors: Formaldehyde operating rates stand at 60%; terminal demand is sluggish, and trading volume remains light. Acetic acid exports demonstrate strong resilience, with operating rates at 75% and sales performing reasonably well. MTBE is experiencing strong demand from both domestic and international markets, with operating rates at 80% and active purchasing interest.

Overall Market Sentiment: Downstream sectors are primarily engaging in essential, need-based purchasing, with little inclination to build up inventory; consequently, overall purchasing activity is moderate. Sales for MTO and MTBE remain strong, while sectors such as formaldehyde are weaker, indicating a structural divergence in demand across the market.

VI. Future Market Outlook

Short-Term Forecast: The methanol market is expected to continue fluctuating within the 3,100–3,300 RMB/ton range. Low inventory levels and cost support provide a floor for prices, while easing geopolitical tensions and high domestic operating rates limit the potential for a significant rebound. Under a state of weak equilibrium between supply and demand, the market is expected to remain largely range-bound. Key factors to monitor include geopolitical developments in the Middle East, the volume of incoming imports, and the progress of new MTO plant startups in downstream sectors.

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