SunSirs: Methanol Market Outlook for the Second Half of 2025

Since the second half of 2025, domestic methanol prices at ports and inland regions have diverged significantly, with inland prices outperforming port prices for most periods. Port prices have trended downward amid persistent volatility, primarily due to record-high import volumes driving continuous inventory buildup. Inland prices, however, rose slightly before declining in the latter half of the year, supported by low corporate inventories and frequent external procurement of olefins.

Port prices faced persistent downward pressure from the weak reality of high imports and high inventories in the second half. Customs data revealed significant import imbalances throughout the year: monthly imports remained below 1 million tons from February to April, but surged in the second half, peaking at 1.75 million tons in August—a record monthly high—and subsequently hovering between 1.4 million and 1.6 million tons. Amid this surge in imports, port inventories peaked in September to reach their highest levels on record. Even with relatively high domestic olefin operating rates in the third quarter, port stockpiles required time to be depleted. Furthermore, elevated global plant operating rates during this period—particularly as Middle Eastern facilities resumed normal operations following the Iran-Israel conflict—combined with weak overseas demand, redirected significant supplies toward the Chinese market. However, starting in November, Middle Eastern plants entered a gas-restriction shutdown cycle, causing a significant drop in operating rates (Iran's rate fell from over 80% to around 20%). Due to transportation lead times, the expected reduction in imports will only be reflected in January 2026. Consequently, the entire fourth quarter faced pressure from high imports and high inventories. A brief inventory draw occurred from late November to early December due to port unloading capacity constraints and weather-related shipping suspensions. Port methanol inventories fell from 1.27 million tons to around 1.11 million tons.

Inland markets saw robust upward trends across all regions (Northwest, Central China, Shandong, and Southwest) during Q3. This was driven by two factors: Second, the shutdown of Ningxia CTO's methanol plant for maintenance at the end of July exacerbated raw material supply shortages. Consequently, procurement volumes increased steadily in July to build inventories (external purchases reached 86,500 tons in July, up 54,500 tons from June's 32,000 tons), leaving upstream manufacturers with low inventory levels. Data indicates methanol plant inventory days stood at approximately 4.81 days in early August. Notably, the divergence between inland and port market trends caused the price differential between Taicang and Shandong to remain negative starting in August, reaching -120 RMB/ton in September. This sustained the reverse flow of port cargoes. Although inland demand support and other bullish factors exist, prices in Northwest, Shandong, Central China, and Southwest regions weakened in the fourth quarter. This was largely due to domestic operating rates remaining at 83%-84%. Additionally, amid declines in futures markets and ports, the inland market could not remain unaffected.

Beyond the above factors, the following changes emerged in the second half of the year:

1. Changes in port imports: Since October, sanctions have prompted most social warehouses to refuse Iranian cargo, altering previous import patterns. First, arrivals at social warehouses decreased while imports entering downstream tank farms increased significantly. Second, some vessels rerouted north to Shandong, with some even flowing to northern Shandong after November. Driven by the price premium of 100-140 RMB/ton for northern Shandong cargoes over Taicang port supplies in early November, the arbitrage profit margin for port cargoes shipped to northern Shandong became more attractive. Traders consequently adjusted their distribution strategies, prioritizing shipments to the northern Shandong market. This shift even caused temporary transport capacity constraints on some logistics routes. Third, non-Iranian cargoes emerged from unconventional import sources. Shipment statistics from November indicate imports from Egypt (approximately 40,000 tons) and South Korea (36,000 tons).

2. Coal-to-olefins demand dynamics: First, improved coal-to-olefins margins. As market prices declined in the second half of the year, olefins profitability significantly improved. Comprehensive margin calculations show a first-half value of -901 RMB/ton, rising to -372 RMB/ton in the second half, with positive margins even emerging in mid-November. Second, sustained external procurement by inland olefin plants (Baofeng) and the addition of Jiutai's methanol unit maintenance after November further bolstered inland demand for externally sourced olefin feedstocks. Third, Lianhong New Materials' Phase II 450,000-ton/year MTO unit is scheduled to start production around December 10, significantly increasing feedstock procurement.

3. Shrinking profits in domestic coal-to-methanol production: Mid-year coal inventories continued to draw down due to peak summer electricity demand. However, in the second half, production declined under anti-overcapacity policies and crackdowns on excess output, leading to a rebound in coal prices. Entering the fourth quarter, coal prices remained firm due to heating season demand and policy mandates for coal supply security. Meanwhile, mainland methanol prices, after a slight uptick in Q3, entered a downward trend in Q4, causing coal-to-methanol margins to plummet significantly.

Looking toward year-end and beyond, several factors warrant market attention: the lag effect of reduced port imports, expected to manifest in January's import contraction; the persistence of external procurement by domestic olefin plants; increased external sourcing following the commissioning of Lianhong's Phase II facility; the timing of new MTBE capacity releases; and coal's pressure on domestic margins. Longer-term considerations include domestic spring maintenance schedules and the commissioning timeline for new downstream demand projects.

As an integrated internet platform providing benchmark prices, on December 23rd, the benchmark price of methanol according to SunSirs was 2140.00 RMB/ton, an increase of 0.94% compared to the beginning of the month (2120.00 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.