In 2026, the overall price trend of methanol throughout the year will be relatively strong in the first half and relatively weak in the second half. Attention should be paid to the upward opportunities during the period of seasonal maintenance and reduced imports, as well as the downward opportunities during the phase of continuous inventory accumulation at ports.
On the supply side, most of the new production capacity put into operation in 2026 will have supporting downstream facilities, so the actual output volume will not be large, and the pressure of domestic production capacity launch will further ease. Attention should be paid to the impact of seasonal maintenance on the operating rate and output. On the demand side, in 2026, there will be a significant growth in demand for methanol-to-olefin plants that purchase methanol from outside, and the new production capacity in traditional downstream sectors will also bring certain demand increments for methanol. The supply and demand pattern may improve to a certain extent. The price of methanol in 2026 may still show seasonal fluctuations: the import pressure will be relatively small in the first half of the year, and the price may rebound; in the second half of the year, it will face greater import pressure, and the price may fluctuate downward.
Capacity continues to grow, with integrated projects as the mainstay
According to Longzhong Information statistics, as of the end of November 2025, the domestic methanol production capacity base reached 108.045 million tons, an increase of about 5.18 million tons compared with the end of 2024, with an annual growth rate of 5%.
Integrated projects have become the absolute main force for new production capacity. Among the new production capacity in 2025, approximately 70% are integrated projects supporting downstream industries (such as MTO, BDO). The main projects include: Baofeng Energy Phase III with 2.8 million tons/year (supporting MTO), Xinjiang Zhongtai with 1 million tons/year (supporting BDO), Inner Mongolia Huineng with 600,000 tons/year (supporting acetic acid), and Wuhai Rongxin with 300,000 tons/year (supporting formaldehyde and acetic acid). The growth rate of non-integrated production capacity has slowed down significantly. In 2025, the growth rate of non-integrated methanol was only about 2%, and independent methanol projects are facing greater market risks and environmental protection pressures. Under the background of the "dual carbon" goals, the approval of simple methanol production projects has become stricter, and investors are more inclined to build integrated projects.
In 2025, China's methanol production capacity structure showed the characteristics of "coal-based dominance, coke oven gas growth, and natural gas shrinkage".
The dominant position of coal-to-methanol has been further strengthened. According to data from the China Nitrogen Fertilizer Industry Association, the coal-to-methanol production capacity reached 85.97 million tons in 2024, accounting for 78.3% of the total production capacity. By 2025, this proportion will rise to 81.8%, mainly due to the concentrated commissioning of large-scale coal-to-methanol projects in the northwest region.
Coke oven gas-to-methanol has become a growth highlight. As a China-specific process, coke oven gas-to-methanol realizes resource recycling by relying on by-product gas from iron and steel coking. Its production capacity accounted for 13.7% in 2025. The single-set scale of this route is mostly 100,000 to 400,000 tons. The new production capacity in 2025 mainly includes projects such as the 300,000 tons/year Wuhai Rongxin project.
Natural gas-based methanol production is facing severe challenges. Restricted by China's resource endowment of "scant gas", the production capacity of natural gas-based methanol only accounts for 9.6% to 12.3%.
In 2026, new methanol production capacity will still be released, including Baofeng's 2.8 million tons/year plant and China Coal Yulin's 2.2 million tons/year plant. Other plants are still planned to be put into operation, but the actual operation may be postponed to 2027. It is expected that the domestic production capacity growth rate will be about 4.3% in 2026.
The cost center of methanol production has shifted upward, making it difficult to improve profits.
Looking ahead to 2026, the coal supply side is likely to maintain a stable situation, and the potential impact of policies still needs to be focused on. On the demand side, due to the continuous expansion of the scope of new energy replacing traditional energy, the room for growth in coal demand will be limited.
If the coal-end policies remain stringent in 2026, the coal price benchmark will move upward. The strong coal price may push up the methanol cost benchmark, but there may be downward pressure on profits. Attention should be paid to changes in coal-end operating rates and downstream demand strength. As a by-product generated during the coking process, coke oven gas has a reasonable profit performance. The cost of methanol production from natural gas fluctuates little, and profits remain poor. Against the backdrop of the "anti-involution" policy and the dual control system of total carbon emissions and intensity, coal prices will stabilize, and the methanol cost benchmark may move upward.
Output continues to rise, while operating rate may drop slightly
According to Longzhong Information's statistics, the cumulative methanol output from January to November 2025 was 92.8 million tons, an increase of 9.12 million tons year-on-year, with a growth rate of 10.9%. Among them, the output in November was 8.584 million tons, an increase of 546,600 tons year-on-year and a decrease of 190,500 tons month-on-month. The estimated annual output is 101.83 million tons, a year-on-year growth of 10.8%.
In 2025, the operating rate of the methanol industry increased. Except for a few sets of equipment that had been shut down for a long time, methanol manufacturers maintained stable production most of the time. Even during the spring maintenance period, due to the non-concentrated shutdown time of the equipment, the decline in methanol operating rate was not obvious, and the overall operating rate remained above 70%. The intensity of spring maintenance in 2025 was significantly weak, resulting in limited production loss of methanol. With both equipment maintenance and restart coexisting, the methanol operating rate fluctuated in a narrow range, with the national operating rate reaching a maximum of over 78% and that in the northwest region exceeding 88% at the highest. Starting from late June, the number of enterprise maintenance plans increased periodically. Several sets of equipment were shut down one after another in July, with the maintenance time being not long. They basically resumed operation at the end of July and the beginning of August, leading to a steady recovery in methanol operating rate. After the third quarter, the methanol operating rate was basically the same as that in 2024. By the end of November 2025, the overall operating rate of the methanol industry was 85.74%, an increase of 2.10 percentage points compared with the same period in 2024.
The demand for dimethyl ether has been declining year by year, and its proportion in the downstream demand structure of methanol has shrunk to about 1%.
From the perspective of market impact, due to the current extremely low proportion, the changes in dimethyl ether demand have become difficult to have a substantive impact on the core dimensions such as the supply and demand balance and price trend of the overall methanol market. In the analysis of methanol downstream demand, it can be regarded as a secondary influencing factor.
The profit from methanol is unlikely to improve significantly in 2026, and the operating rate of coal-to-methanol plants may decline slightly. However, due to the release of new production capacity, methanol output is expected to continue to increase in 2026.
Influenced by multiple factors, the growth rate of imports has increased
The Chinese methanol import market showed a "V" shaped trend in 2025, setting the highest and lowest monthly import volume records in nearly 10 years. The annual import fluctuations were mainly affected by multiple factors such as overseas supply, international logistics and regional price differences. From January to November 2025, China's cumulative methanol imports reached 12.6969 million tons, a year-on-year increase of 2.60%. Import volume in December 2025 is expected to rise again, with the full-year estimated import volume being 14.28 million tons, an increase of 5.9% year-on-year.
In 2025, the total new methanol production capacity released in the overseas market was 3.35 million tons, which was lower than expected. Specifically, it included the PetroVietnam 3# plant (1.7 million tons/year) put into operation at the end of 2024 and the Iranian Apadana plant (1.65 million tons/year) commissioned in April 2025. Entering 2026, the pace of new overseas methanol production capacity put into operation has slowed down significantly. Only one Iranian Dena plant (1.65 million tons/year) is planned for the whole year, and the project is tentatively scheduled to be put into operation in the second half of 2026. Other projects such as Iran's Siraf, BADR-E-shargh and Russia's NFP have all been postponed to 2027-2028 for commissioning.
Based on the above data calculation, the nominal new overseas methanol production capacity in 2026 will be only 1.65 million tons, corresponding to a nominal capacity growth rate of 2.2%. If calculated by weighting the commissioning time, the actual capacity growth rate of external markets will be only about 0.8%, and the pressure of annual capacity release will be generally moderate.
In 2026, considering factors such as the commissioning of new production capacity and the restriction on India's imports of Iranian goods under the background of U.S. sanctions, China's imports of methanol from Iran will still increase. Meanwhile, the proportion of methanol imports from Russia may further rise in 2026. Taking into account U.S. sanctions, geopolitical conflicts and newly commissioned plants, China's methanol import growth rate is estimated to be 6% - 7%, higher than that in 2025.
Demand still has room for growth; attention should be paid to the implementation situation.
In 2025, the downstream demand industries of methanol showed a trend of high operating rates in coal-to-olefins, a slight recovery in traditional industries, and a certain increase in fuel demand. In 2025, the average weighted operating rate of China's methanol downstream industries was about 76%, an increase of 3 percentage points compared with 2024. The monthly average apparent consumption of methanol was about 880,000 tons, a year-on-year increase of 6.7%, with the growth rate reaching the highest level in the past 5 years.
In terms of consumption structure, methanol-to-olefins remains the main downstream sector, with its demand accounting for a stable 50% or so. It is followed by other fields such as glacial acetic acid, MTBE, formaldehyde, methanol-to-hydrogen, and dimethyl ether. Although olefin projects with supporting methanol plants can theoretically achieve self-sufficiency, some methanol-to-olefins plants still had phased external procurement activities in 2025, providing solid support for market demand.
In 2025, the commissioning scale of domestic MTO units continued to expand. It is estimated that the new capacity will reach 3.3 million tons throughout the year, and the total capacity will climb to 23.395 million tons, with the annual growth rate rebounding to 16.4%. The industry has officially returned to the growth track. The core driving force for capacity growth is the concentrated release of large-scale projects, among which two key projects have made significant contributions.
The combined 2 million tons of olefin plants in the second and third phases of Inner Mongolia Baofeng were successfully put into operation in the first quarter of 2025. Together with the first phase project put into operation in November 2024, its total olefin production capacity has jumped to the top in the world. The project is equipped with 3 sets of 2.2 million tons/year methanol plants, which can achieve complete self-sufficiency in raw materials at the design level. However, during the commissioning and initial operation period, due to unstable operating conditions of the supporting methanol plants, the output could not temporarily meet the downstream demand, resulting in the situation where Inner Mongolia Baofeng had to purchase methanol externally in stages. This phased demand became a key supporting factor for the mainland methanol prices to remain firm for most of 2025.
Another key project, Shandong Lianhong Gerun's 1.3 million-ton MTO plant, was put into operation in December 2025. This plant has no supporting methanol production capacity. After its commissioning, the annual demand for externally purchased methanol will reach 3.458 million tons, which is expected to become the core increment of external methanol demand in 2026. Shandong itself is a core methanol consumption area. The new demand from Lianhong Gerun will further intensify the tight balance between local supply and demand, forcing adjustments in the flow direction of domestic methanol sources: the inflow of methanol from the northwest, northern Jiangsu, and central China regions will increase significantly, and some imported methanol will also be allocated to this region at an accelerated pace.
It is worth noting that in 2025, methanol-to-olefin plants relying on purchased methanol remained mired in losses. The annual loss of coastal plants using purchased methanol exceeded 1,000 CNY per ton, with the loss severity further worsening compared to 2024. The core issue lies in the dual squeeze from raw material costs and product prices. On one hand, in the first half of the year, methanol spot prices in coastal areas remained relatively firm due to the concentration of available supplies, pushing up the raw material costs for enterprises that purchase methanol from outside. On the other hand, the prices of their main products such as olefins and other chemical products remained weak due to the loose supply and demand situation, and downstream enterprises had limited capacity to bear high-priced raw materials. Ultimately, this led to a severe erosion of the plants' profit margins.
In 2025, the annual average operating rate of methanol-to-olefins was approximately 83%, an increase of about 3 percentage points compared to 2024. The annual average operating rate of methanol-to-olefins plants using externally purchased methanol was around 77%, up by 4 percentage points from 2024.
In 2026, the MTO industry will continue its rapid development trend. It is expected that the annual new capacity will be 3.2 million tons, the total capacity will exceed 26.595 million tons, and the growth rate will remain at a relatively high level of 13.7%.
Looking at specific projects to be put into production, Guangxi Huayi Energy's 1 million-ton/year MTO unit is scheduled to be completed in early 2026. It is reported that the enterprise currently has a methanol production capacity of 1.8 million tons/year, along with supporting facilities including a 1.2 million-ton/year acetic acid unit and a 900,000-ton/year ethylene glycol unit. At present, its annual external sales of methanol are about 1 million tons, mainly sold to the South China region. After the MTO unit is put into operation, the enterprise's existing externally sold methanol will be unable to meet its own raw material demand, and it is expected to need an additional 2 million tons of methanol purchased from outside annually. This change will promote the Guangxi region to become a new growth point for methanol consumption in South China. The regional methanol flow is expected to shift from a net outflow to a net inflow. Methanol from the Sichuan-Chongqing region and imported methanol will become the main supply sources, and the supply and demand pattern of methanol in South China is facing reshaping.
In addition to Guangxi Huayi Energy, the MTO projects planned to start production in 2026 also include Inner Mongolia Rongxin Chemical's 800,000 tons/year project, China Coal Yulin Phase II 900,000 tons/year project, Ningxia Baofeng Phase IV 500,000 tons/year project, and Xinjiang Shanneng Chemical's 800,000 tons/year project, etc. Different from projects such as Guangxi Huayi Energy and Lianhong Gerun that need to purchase methanol from outside, the above-mentioned projects are all equipped with their own methanol production capacity, which can basically achieve self-sufficiency in raw materials without external procurement. The "coal - methanol - olefins" integration has become the mainstream development direction of the current MTO industry.
In 2025, the year-on-year growth rate of demand for methanol from traditional downstream sectors declined, significantly lower than in previous years.
The acetic acid industry entered a period of concentrated production in 2025, with the annual production growth rate reaching as high as 31%. However, there was a significant divergence between capacity release and demand absorption. Data shows that from January to October 2025, the year-on-year growth rate of acetic acid output was only 11%, a sharp drop from the 21% growth rate in 2024, reflecting insufficient market digestion capacity after the launch of new production capacity.
Looking ahead to 2026, the operating rate of existing production capacity in the acetic acid industry is expected to continue its downward trend. On one hand, the new production capacity put into operation in 2025 will still be in the period of capacity release, and the pressure on market supply will persist. On the other hand, if there is a lack of substantial recovery momentum on the demand side, the contradiction between supply and demand in the industry will be difficult to fundamentally ease, and existing plants will face continuous pressure to adjust their operating load to achieve a weak balance between market supply and demand.
In 2025, the MTBE industry entered a high boom period of production, with the annual production growth rate reaching as high as 19%. Moreover, the pace of capacity release showed the characteristics of balanced monthly distribution, providing a solid support for the steady growth of output. The output performance was eye-catching. From January to October 2025, the year-on-year growth rate of MTBE output was 17.1%, which matched well with the high production growth rate, mainly benefiting from the strong uptake on the demand side.
Under the backdrop of a well-matched supply and demand pattern, the inventory capacity pressure in the MTBE industry has been continuously alleviated since June, and the market as a whole has maintained a relatively high operating level. The industry operation shows a virtuous cycle of "orderly release of production capacity - synchronous follow-up of demand - dynamic balance of supply and demand", highlighting the effective capacity of the demand side to accommodate the high production cycle.
In 2025, the pace of new production in the formaldehyde industry slowed down, with the annual production growth rate remaining at a low level, approximately 2.6%, indicating a moderate expansion in industry supply. From January to October 2025, the cumulative output of formaldehyde increased by 16.3% year-on-year, reflecting a high efficiency in the release of existing production capacity. However, it is worth noting that despite the significant growth in output, the supply and demand pattern of the formaldehyde market still faces structural pressures. On one hand, the overall inventory level of the industry is higher than that in the same period of previous years, and the inventory pressure persists. On the other hand, affected by market competition and insufficient support from the demand side, the production profit of formaldehyde has further dropped to a low range since the third quarter of 2025, and the profit pressure on the industry has increased.
The demand for dimethyl ether has been showing a year-by-year downward trend, and its proportion in the demand structure of methanol downstream has shrunk to about 1%. From the perspective of market impact, due to the extremely low current proportion, changes in dimethyl ether demand can hardly have a substantial impact on the core dimensions of the methanol market as a whole, such as supply-demand balance and price trends, and can be regarded as a secondary influencing factor in the analysis of methanol downstream demand.
It is expected that the traditional downstream demand for methanol will contribute positive growth in 2026, with the core growth drivers still focusing on the two major fields of acetic acid and MTBE. Among them, relying on the international comparative advantage of export prices, the export demand for MTBE is expected to continue its growth trend in 2026, becoming an important support on the demand side. From the perspective of capacity put into operation, in 2026, traditional downstream sectors such as acetic acid, MTBE, and formaldehyde still have plans to put new plants into production. The new capacity will bring certain demand growth for methanol, which is the core supporting logic for the demand side throughout the year. In terms of data, the new capacity of traditional downstream sectors in 2026 is converted into a nominal new demand for methanol of about 3.33 million tons. Although it is a decrease compared with 2025, the overall scale still has supporting power. Moreover, the demand pull is concentrated in the first half of the year. Calculated by weighting the commissioning time, the actual new methanol demand from traditional downstream sectors throughout the year is about 2.5 million tons, which corresponds to a 2.5% growth in methanol demand.
It should be noted that most traditional downstream sectors are currently facing significant pressure from overcapacity, with the industry's profit levels remaining in a meager range for a long time. The operating rate of existing facilities is prone to decline due to the squeeze from profit fluctuations. This structural contradiction will partially offset the demand growth brought by the launch of new production capacities, making the actual realization effect of the demand growth in traditional downstream sectors for methanol in 2026 face certain uncertainties. It is necessary to continuously track the profit recovery of downstream industries and changes in operating rates.
Prices fluctuate seasonally
On the supply side, most of the newly commissioned production capacity in 2026 will be matched with downstream facilities, resulting in a small actual output volume, and the pressure from domestic production capacity commissioning will further ease. Attention should be paid to the impact of seasonal maintenance on operating rates and output. On the demand side, in 2026, there will be a significant growth in demand for methanol-to-olefins plants that purchase methanol externally, and the new production capacity in traditional downstream sectors will also bring certain demand increments for methanol. In 2026, considering factors such as the commissioning of new production capacity and the restriction on India's imports of Iranian goods under the background of U.S. sanctions, China's imports of methanol from Iran will still increase. Imports from non-Iranian sources will also grow. Based on the above analysis, the supply and demand in methanol producing regions throughout the year may be in a tight balance, but due to import pressure, the overall supply and demand will still be in a relatively loose pattern. Compared with 2025, the supply and demand pattern in 2026 may improve to a certain extent.
The price of methanol in 2026 may still show seasonal fluctuations: in the first half of the year, the import pressure is relatively small, and the price may rebound; in the second half of the year, facing greater import pressure, the price may fluctuate downward. Overall, the trend for the whole year is that it is relatively strong in the first half and relatively weak in the second half. Attention should be paid to the rising opportunities during the period of seasonal maintenance and reduced imports, as well as the falling opportunities during the period of continuous inventory accumulation at ports.
