According to China Energy Network, Iran's methanol production has increased rather than decreased during the gas restriction window following the restart of its Marjan plant (1.65 million tons/year). The timing of the restrictions also failed to meet market expectations. With confidence shaken, market sentiment remains weak, and the main methanol futures contract continues to fluctuate weakly at low levels.

Iran Needs Foreign Exchange Earnings in Second Half

Since 2025, U.S. sanctions on Iran's energy sector have intensified, expanding from liquefied petroleum gas (LPG) production to related transportation networks, directly impacting Iran's vital foreign exchange earnings. With LPG exports hindered, the methanol industry—boasting substantial production capacity and export potential—has become a key economic lifeline for the Iranian government.

Iran's significant production increase in the second half stems from its need to generate foreign exchange. Consequently, Iran is operating all available methanol plants to maximize output before gas restrictions take effect. However, methanol sales revenue remains significantly lower than oil and gas revenues, accounting for only 4%–5% of total energy export income—insufficient to elevate it to a “key pillar supporting the national economy.”

Iran Faces High Probability of Gas Shortages This Winter

Iran's methanol production heavily relies on natural gas feedstock, which constitutes 70% of the country's primary fuel energy. Winter heating demand surges annually, exacerbating gas supply constraints. Scheduled maintenance during winter allows methanol plants to service aging equipment, prevent production accidents, and alleviate gas supply pressures through staggered shutdowns.

Consequently, industrial facilities like methanol plants must halt operations when gas supply tightens. Statistically, winter gas shortages in Iran are highly probable, though their severity remains uncertain.

Monitoring Iran's Gas Cutoff Timing

Recent reports indicate Iranian shipments failed to sell despite a 3% price reduction, as methanol producers still face inventory pressure. This stems primarily from China's major storage hubs refusing Iranian cargoes due to sanctions concerns. Iranian methanol producers are sacrificing price for volume, significantly dampening market sentiment. With Iran experiencing above-average temperatures this season, production remains elevated, further delaying potential gas cutoff windows.

This week may bring cooler temperatures to Iran, warranting attention to the operational stability of local methanol plants. Should Iranian methanol output begin a systematic decline, prices could reach an inflection point. Additionally, from a cost perspective, if Iran implements winter gas pricing, high costs coupled with low methanol prices could lead to insufficient profitability, potentially impacting plant operations—a situation requiring ongoing monitoring.

Overall, while domestic coal-based methanol profits have weakened, they remain elevated, and overall methanol supply remains ample. Monitor the timing of gas-based plant shutdowns in China operating at significant losses and the timing of gas supply cuts at Iranian plants amid substantial natural gas supply-demand gaps. Traditional downstream demand is gradually shifting into the off-season, with reduced MTO demand anticipated. Monitor the extent to which the concentrated ramp-up of MTO, acetic acid, and MTBE facilities in Q4, along with winter fuel demand, will stimulate methanol consumption. In the short term, methanol will maintain a weak bottoming consolidation amid persistent high port inventory pressure and Iran's strong destocking intentions.

Medium to long term: U.S. sanctions have led certain domestic storage facilities to reject Iranian cargoes, causing temporary import disruptions. With domestic and international gas supply restrictions and plant shutdowns approaching, seeking low-risk long positions in distant-month contracts becomes more prudent after port inventories show a turning point.

As an integrated internet platform providing benchmark prices, on November 10, the benchmark price of methanol on SunSirs was 2087.00 RMB/ton, a decrease of 3.16% compared with the beginning of the month (2155.00 RMB /ton).

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