Since the third quarter of this year, methanol prices have been on a steady decline. This is primarily due to sustained growth in imports, which has led to a significant buildup of port inventories to their highest levels in recent years. Additionally, Iran's methanol plants have delayed their shutdowns compared to last year, and the anticipated reduction in imports has yet to materialize. Port inventories are unlikely to be drawn down this year, and inventory pressure may persist into the first quarter of next year. In the short term, methanol prices are expected to remain weak and volatile.

1. Domestic Supply Remains Elevated as Iran Shuts Down Later Than Expected

Domestic operating rates have maintained high levels. While some domestic plants underwent autumn maintenance around October, most have since resumed operations, leaving few facilities currently offline. According to operating rate data, as of the week ending November 14, the domestic methanol plant operating rate stood at 76.5%. Specifically, coal-based methanol plants operated at 82.5%, coke oven gas-based plants at 59.4%, and natural gas-based plants at 50.6%. With few plants currently undergoing maintenance, domestic natural gas-based methanol plants may begin shutting down for maintenance starting late November, slightly reducing domestic supply.

Overseas supply remains elevated. Most Iranian plants are currently operating normally, though market reports indicate partial shutdowns planned for late November, including ZPC's 2.3 million tons, Kimiya's 1.65 million tons, Sabalan's 1.65 million tons, and Kaveh's 1.65 million tons. Market participants await confirmation of these Iranian plant shutdowns. Compared to last year, this year's Iranian methanol plant shutdowns are significantly delayed. Last year, most Iranian plants began gradual shutdowns for maintenance in late October, but this year's shutdowns may be postponed until late November. Additionally, due to U.S. sanctions, Iran faces restrictions on exports to other countries, causing most Iranian supplies to flow into the domestic market. Iranian plant shipments in November remain at relatively high levels, indicating that China's methanol imports in December will remain elevated.

2. Port Inventory Pressure Persists

Port inventory pressures are unlikely to ease within the year. Since June, sustained increases in domestic methanol imports have driven port stockpiles higher. Imports reached 1.736 million tons in August, 1.421 million tons in September, and 1.612 million tons in October. With imports expected to remain elevated in November and December, domestic port inventories have accumulated substantially. Current port stockpiles exceed 1.6 million tons, and available port inventory has also surged to record highs. Based on projected import volumes for November and December, port destocking by the end of 2025 appears unlikely, maintaining pressure on warehouse receipts for the 2601 contract. The actual destocking timeline will depend on Iran's actual production shutdown duration.

Inland enterprise inventories have also gradually accumulated since October. As domestic maintenance facilities gradually resume operations and this year's traditional downstream peak season has been lackluster, inland inventories have seen a slight increase. However, due to the commissioning of traditional downstream facilities in recent years while methanol plants have seen limited additions, inland markets maintain a tight balance. Against the backdrop of constrained new methanol capacity and ongoing downstream commissioning, inland inventory pressure is expected to remain manageable.

3. Upstream Profits Squeezed, Downstream Margins Rebound

Upstream profit margins have rapidly compressed. Since September, coal prices have rebounded persistently. Increased heating demand in northern China following colder temperatures, coupled with ongoing policies restricting excess coal production, has driven significant price hikes at both ports and mine mouths. This has substantially raised production costs for coal-based methanol in mainland China. However, since July, substantial port inventory buildup has pushed down port methanol prices, dragging down inland prices as well. The upward shift in costs coupled with falling methanol prices has rapidly compressed production margins for coal-based methanol in inland regions, with profits in some areas now below the break-even point. Profits for domestic natural gas-based methanol plants have been squeezed even more severely. While methanol prices shifted downward after coal prices returned to reasonable levels in 2023, persistently high domestic natural gas prices have kept profits weak for southwest China's natural gas-based methanol plants throughout the year. This compression intensified in Q4 following methanol's sharp price decline.

Downstream profits have gradually recovered in the latter half of the year, particularly with the recent sharp drop in methanol prices. For olefins, both market and corporate profits have shown significant improvement, with theoretical profits for Zhejiang Xingxing's MTO facility returning to their highest level this year. Traditional downstream profits have also seen a notable recovery. Since 2023, when traditional downstream projects came online but methanol production faced constraints, traditional downstream profits have declined annually. In 2024 and 2025, downstream profits remained near recent lows. However, with the sharp drop in methanol prices in the fourth quarter of this year, traditional downstream profits have gradually increased.

4. Summary and Outlook

The recent accelerated decline in methanol prices stems primarily from substantially increased imports driving persistent port inventory buildup. Current port inventory pressure remains immense, with no inventory inflection point expected this year.

As an integrated internet platform providing benchmark prices, on November 25, the benchmark price of methanol on SunSirs was 2066.00 RMB/ton, a decrease of 4.13% compared with the beginning of the month (2155.00 RMB /ton).

Application of SunSirs Benchmark Pricing：

Traders can price spot and contract transactions based on the pricing principle of agreed markup and pricing formula (Transaction price=SunSirs price + Markup).

If you have any inquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.