According to China Chemical News, the domestic methanol market has faced sustained downward pressure since the second half of the year. As of November 20, mainstream transaction prices had fallen to around CNY2,000 per ton, with the national average price at CNY 2,042—marking a decline exceeding 11% over the past six months.

This prolonged weakness stems primarily from market dynamics of increased supply and reduced demand, compounded by the impact of weakening international markets on the domestic sector, collectively driving prices to new lows. With winter approaching, fundamental factors such as upstream cost support, shifting supply-demand dynamics toward reduced supply and increased demand, and continued inventory drawdowns have begun to ease bearish sentiment, suggesting potential market stabilization.

Cost Support

According to officials from the Henan Petrochemical Association, China's methanol industry achieved both production and consumption growth in 2024. However, since the second half of 2025, market supply-demand mismatches have driven sustained price declines.

In terms of feedstock structure, coal-based methanol dominates China's production, accounting for 78.3% of total capacity. New coal gasification technology accounts for 72.5% of this capacity, demonstrating significant technological advancement. Meanwhile, methanol production from coke oven gas and other waste gas utilization accounts for 14.4% of capacity. With the coking industry's ongoing transformation and upgrading, growth in such projects has gradually stabilized. Consequently, fluctuations in upstream costs directly impact methanol market pricing.

The decline in China's coal prices in 2024 alleviated cost pressures for coal-based methanol producers. However, starting in the winter of 2025, firm coal prices coupled with rising natural gas costs will exert pressure on both coal-based and natural gas-based methanol production. This strengthened cost support provides a favorable foundation for the methanol market to stabilize after hitting recent lows.

Supply Declines, Demand Rises

The methanol industry has seen steady capacity growth in recent years, with annual production exceeding 112 million tons in 2024. New capacity additions are projected to reach 5 million tons in 2025, representing an increase of over 4.4%. Against the backdrop of sluggish downstream demand that has failed to recover as anticipated, the ongoing weakness in the methanol market reflects the fundamental dynamics of supply and demand.

However, a pivotal shift emerged in late November. During the week of November 20, China's domestic methanol supply totaled 2.303 million tons, while demand reached 2.3779 million tons—marking a reversal from the previous week's supply-demand dynamics.

On the supply side, with Iran's heating season commencing in December, methanol imports are projected to decrease significantly by 50%. Coupled with rising natural gas prices driving up production costs, domestic manufacturers are showing a trend toward reducing output. Regarding downstream demand structure: - Methanol-to-olefins, the dominant application, saw some olefin producers reduce self-production and increase external procurement due to cost pressures, creating short-term growth. - Methanol fuel, the second-largest application, gained momentum from heating season demand and shipping needs, becoming a key driver in shifting the supply-demand balance. Among traditional downstream sectors, stable demand persists for formaldehyde, acetic acid, and methyl tert-butyl ether (MTBE). In emerging applications, high-value-added products like 1,4-butanediol and methanol-based hydrogen production are emerging as new growth engines.

Inventory Decline

Data indicates that as of November 22, domestic methanol sample enterprises held 358,700 metric tons of inventory, continuing a modest drawdown trend. Regionally, inventories declined in most areas except Southwest China, where weak demand led to accumulation. Northwest China saw particularly sharp inventory reductions, driven by external olefin procurement support, active shipments by holders, and profit-sacrificing inventory clearance by enterprises. Other regions experienced synchronized inventory declines due to voluntary price concessions or reduced plant operating rates.

Port-related enterprise representatives indicated that overseas plant capacity utilization remained high this year, with Iranian plants operating at full capacity and production cuts falling short of expectations. Methanol imports reached 1.65 million tons in October, and imports remained elevated in November, causing port inventories to accumulate to historically high levels. This has become another major factor driving down methanol prices. However, driven by restocking in inland regions, port inventories began to decline noticeably starting in the third week of November. Social warehouses in East China saw robust withdrawals, with stable downstream demand overall. Port inventories in South China also continued their downward trend. Considering the current inventory situation, the ongoing inventory reduction by domestic producers and ports with high stockpiles is expected to positively contribute to market stabilization.

After late November, as domestic plants undergoing maintenance gradually resume operations, overall capacity utilization is expected to increase, enhancing supply capacity. Additionally, with some olefin producers completing their phased restocking and the potential for increased winter trucking costs to be passed on to producers, further downward pressure on ex-factory prices cannot be ruled out. Therefore, the supply-demand tug-of-war will persist in the short term, and the methanol market is likely to consolidate within a narrow range as it recovers.

As an integrated internet platform providing benchmark prices, on November 28, the benchmark price of methanol on the business information platform was 2103.33 RMB/ton, a decrease of 2.4% compared with the beginning of the month (2155.00 RMB/ton).

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