SunSirs: The Global Methanol Market Enters a New Development Phase

New market dynamics reveal an irreconcilable contradiction between supply-side rigid expansion—particularly the release of low-cost natural gas-based methanol capacity led by Iran and the United States—and demand-side endogenous contraction. This profound systemic supply-demand mismatch signifies that the global methanol market has formally departed from its old growth paradigm, entering a new development phase dominated by resource competition and existing capacity dynamics.

Global Market Shifts to “Three-Legged Stable” Structure

In recent years, the global methanol supply landscape has undergone profound restructuring, forming a “three-legged stable with distinct regional divisions.” China, leveraging the world's largest coal-based production capacity and vast domestic market, has established a relatively independent domestic demand closed-loop system. Although China's methanol production growth has slowed, its continuously expanding internal demand continues to profoundly influence global trade flows and price benchmarks. Meanwhile, the Middle East (centered on Iran), leveraging its abundant natural gas resources, has emerged as the world's primary source of new production capacity and a low-cost export hub. The concentrated deployment of substantial new capacity is reshaping global cost margins and trade routes. The United States, leveraging the flexible cost advantages brought by the shale gas revolution, plays a unique “balancing” role in the global market. Its production and export decisions are highly dependent on cross-regional price differentials, making it a key “swing supplier” that regulates the equilibrium between Atlantic and Pacific markets.

The reinforcement of this landscape signifies that the global methanol industry has shifted comprehensively from a demand-driven model based on market forces to a resource-competitive model rooted in resource endowments.

China's market core variables primarily stem from the import side

Turning to the domestic market, the defining feature of China's methanol sector in 2025 is sustained supply growth, directly driven by high production capacity utilization. Domestic coal prices remain at relatively low levels, significantly improving the economics of coal-to-methanol plants and effectively restoring production profits. Driven by profits, enterprises maintain strong production willingness and actively sustain high operating rates. Concurrently, planned maintenance across the industry remains limited this year, failing to provide effective supply adjustments. These factors collectively keep coal-to-methanol plant operating rates at historically high levels, resulting in ample market supply that suppresses prices.

Looking ahead to 2026, China's methanol supply landscape will exhibit pronounced structural divergence. New capacity additions primarily stem from two pathways: First, green methanol, though its high costs and niche initial demand (e.g., marine fuel) position it as a parallel track to traditional bulk chemical markets. Second, conventional capacity expansions, exemplified by Wuhai Rongxin's 300,000-ton coke oven gas facility and China Coal Yulin's Phase II 2.2-million-ton coal-to-methanol project. The Zhongmei Yulin facility is integrated with downstream methanol-to-olefins (MTO) processing, enabling vertical integration where methanol output is largely consumed internally, thus avoiding spot market disruption. Consequently, despite substantial nominal capacity additions, the actual effective supply influx into the market may fall far short of expectations. The core supply-side tension may shift from domestic production to competition and allocation of imported supplies.

By 2026, the core supply pressure in China's methanol market will undergo a structural shift. Despite substantial new capacity additions, the demand segmentation between green methanol and traditional markets, coupled with the integrated nature of large coal-based plants, will limit the effective supply increase released into the spot market. Consequently, the primary variable on the supply side will stem from imports, specifically dependent on the arrival pace, volume, and price competitiveness of low-cost overseas cargoes.

Looking ahead, the global methanol market will enter a phase of moderate growth accompanied by heightened volatility. This period will be fundamentally characterized by a complete shift in price-driving logic: decisive factors will transition from long-term, predictable capacity expansion cycles to short-term variables marked by high uncertainty, such as operating rates, geopolitical tensions, and energy price fluctuations. Market rebalancing will unfold as a protracted adjustment process, its trajectory heavily dependent on two critical variables: first, the substantive elimination of outdated capacity on the supply side through market mechanisms; second, the scaling up of new demand segments like green methanol on the demand side, driven by mandatory policy initiatives.

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