According to China Chemical News, domestic methanol prices have gradually strengthened recently amid sustained geopolitical tensions driving up premiums globally. On January 26, the main methanol futures contract closed at CNY2,347 (per ton, same below), while the Shandong region's ex-factory benchmark price stood at CNY2,173. Industry analysts suggest methanol prices may experience a temporary rebound, but with insufficient demand support, the upward potential is expected to be limited, keeping prices in a low-range fluctuation pattern.

Supply-Side Expansion on Two Fronts, Weak Demand Support

In 2025, China's methanol market faced a pronounced supply-demand imbalance driven by increased supply, import pressure, and weak demand. Prices trended downward throughout the year, with the year-end spot average price falling over 15% from the beginning of the year, putting sustained pressure on industry profitability.

SunSirs analysts note that this supply-demand imbalance is the primary driver of the methanol market's weakness. The supply side features dual growth in “capacity + imports,” sharply contrasting with the demand side's “traditional weakness + emerging shortfall.”

On the supply side, both capacity and imports reached high levels, leading to ample supply. Statistics indicate that in 2025, the average annual operating rates for coal-based and natural gas-based methanol plants were 80% and 49% respectively, with the industry's overall operating rate exceeding 78%, ensuring ample production. Annual imports are projected to grow by 5.9% year-on-year, reaching a record high. Particularly in the second half of the year, a surge in overseas supplies flooded the market, pushing port inventories to a peak of 1.674 million tons in November, exerting strong downward pressure on spot prices.

On the demand side, weak traditional downstream consumption and insufficient cultivation of emerging applications constrained growth. The core downstream methanol-to-olefins (MTO) sector suffered prolonged losses and low operating rates due to inverted polyolefin margins, forcing external procurement facilities to remain idle. Emerging applications like methanol fuel and commercial vehicles gradually gained traction but remained small-scale due to industry standards and infrastructure limitations, unable to compensate for traditional demand shortfalls in the short term.

External Disturbances Deliver Strong Impact; Iranian Imports Emerge as Variable

International geopolitical dynamics and import fluctuations significantly influence the methanol market. In 2025, methanol import price volatility will be primarily driven by multiple factors including overseas supply, international logistics, and regional price differentials.

Data indicates Iran currently possesses an annual methanol production capacity of 17.31 million tons, accounting for 9.36% of global output. with exports to China projected at 8.73 million tons in 2025, accounting for 60.42% of China's total imports. Due to winter gas rationing, Iran's methanol operating rate currently hovers around 16%, with over 80% of facilities idled, leading to a sharp decline in exports to China. On January 16, Iran's monthly shipment volume stood at just 275,000 tons, a significant month-on-month contraction.

Recently, Iran's deteriorating domestic economic conditions have triggered social unrest, evolving into a complex situation involving both internal and external factors, entering a period of high uncertainty. Jinlianchuang estimates China's methanol imports in January at 1.05-1.10 million tons, a decrease of about 400,000 tons month-on-month. Port inventories are expected to decline rapidly in mid-to-late January, potentially boosting market confidence.

Supply-Demand Interaction Drives Inventory Drawdown; Bull-Bear Stalemate Narrows Range

The current methanol spot market primarily consolidates within a range. Despite expectations of port inventory drawdowns, demand from sources like MTO has weakened. With both supply and demand projected to contract, the spot market is likely to continue its narrow consolidation. Concurrently, uncertainties in the international landscape prevent a clear trend in the spot market.

In 2026, methanol prices may exhibit seasonal fluctuations. Import pressure is expected to be relatively low in the first half, potentially supporting price recovery. However, significant import pressure in the second half could lead to fluctuating downward price movements. On the supply side, most new capacity additions in 2026 are tied to downstream projects, resulting in limited actual output. Attention should be paid to the impact of seasonal maintenance on operating rates and production volumes. On the demand side, externally procured facilities will see notable growth in 2026, while new capacity additions in traditional downstream sectors will also contribute to certain demand growth, potentially improving the supply-demand balance.

SunSirs believes that in the short term, shrinking imports coupled with inventory drawdowns may trigger a temporary price rebound. However, the extent of this rebound will be constrained by the recovery of MTO margins and the pace of traditional demand recovery. Long-term, as green methanol's application potential in shipping and new energy vehicles is unlocked, and driven by the EU's Carbon Border Adjustment Mechanism (CBAM) policy, green methanol will emerge as a core growth sector. At that point, high-cost traditional plants will accelerate their exit, further consolidating industry concentration. The market landscape will evolve toward greener, higher-end, and more centralized operations.

As an integrated internet platform providing benchmark prices, on January 29th, the benchmark price of methanol according to SunSirs was 2288.33 RMB/ton, an increase of 3.66% compared to the beginning of the month (2207.50 RMB/ton).

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