A review of the market trend shows that methanol futures experienced weak fluctuations in the week before the Spring Festival. With the easing of Middle Eastern geopolitical conflicts, market focus returned to fundamentals. As downstream enterprises gradually halted operations for the holiday, expectations for demand contraction intensified. Combined with high port inventory levels, market selling pressure was released, leading to weak and volatile prices. On the last trading day before the holiday, risk-averse sentiment intensified, prompting significant long position reductions. The main 2605 contract closed at 2,188 yuan per ton, hitting a new low since late January. During the holiday, military tensions between the US and Iran escalated. On one hand, Iran, being a major methanol exporter, saw its unstable situation directly boost risk appetite in the methanol market. On the other hand, crude oil prices rose significantly during the holiday due to similar drivers, providing support for oil-based chemical products, which subsequently transmitted upward to methanol. Influenced by these factors, methanol futures opened higher and rose on the first trading day after the holiday, gaining over 3% in the morning session and recovering the losses from the pre-holiday week.
The spot market performance was relatively stable. Trading was subdued in the week before the holiday, with limited price fluctuations in port markets. Domestic producers maintained firm offers after completing pre-holiday inventory reductions through price cuts, with market prices in the Northwest region showing a noticeable rebound. After the holiday, coastal port prices followed the futures market upward, although trading activity had not fully resumed.
Domestic supply remains high. China's methanol production reached 9.0024 million tons in January, a decrease of 66,800 tons from December but still the second-highest level in recent years. In February, methanol plant capacity utilization rates climbed back above 90%, and monthly production is expected to set a new historical record. High-frequency data shows that for the week of February 20, domestic methanol plant capacity utilization was 92.75%, up 0.68 percentage points week-on-week and 3.63 percentage points year-on-year. Weekly output was 2.072 million tons, an increase of 15,200 tons from the previous week. By process, plants in the Northwest region, primarily coal-based, operated at capacity utilization rates above 97%, indicating full capacity release. Coal-to-methanol unit output was 1.5452 million tons, up 14,400 tons week-on-week; coal-based combined methanol unit output was 196,100 tons, up 800 tons; natural gas-based unit output was 131,000 tons, slightly down; and coke oven gas-based unit output was 191,500 tons, essentially flat.
Overseas plant capacity utilization saw a narrow rebound but remains low for the period. According to Longzhong data, for the week of February 20, the operating rate of overseas methanol plants was 51.24%, up 4.99 percentage points from the week before the holiday but 7.24 percentage points lower than the same period in previous years. Weekly output was 747,500 tons, an increase of 72,700 tons week-on-week but a decrease of 82,700 tons year-on-year. Changes were mainly concentrated in non-Iranian regions, with North American units gradually restarting, Indonesian units resuming operations, a Brunei unit in Southeast Asia halted due to malfunctions, and a small Malaysian unit in Labuan experiencing issues. In Iran, a major import source, plants entered the winter gas restriction period, with many units still shut down. Imports are expected to continue declining in February, becoming a core bullish factor supporting methanol prices. Concurrently, uncertainty surrounding the Iran conflict continues to raise market concerns about the stability of its methanol production and exports. Although no substantial impact on supply has occurred yet, speculative activity has amplified market volatility. The sustained tension in the Middle East during the holiday has become a significant geopolitical risk factor affecting methanol prices. The deployment of US aircraft carriers and escalating rhetoric have heightened US-Iran对峙. As the world's largest methanol exporter, Iran's low plant operating rates and shrinking shipment volumes mean any further escalation could completely halt its methanol exports, simultaneously affecting global crude oil and natural gas supplies and potentially driving methanol prices significantly higher. These concerns are a key support for the recent firm tone in methanol prices, though caution is warranted against potential sentiment cooling should tensions ease. Progress in US-Iran negotiations leading to reduced tensions could put downward pressure on methanol prices.
On the demand side, the market is in a seasonal low, with downstream purchasing remaining cautious. MTO demand has shown some recovery but overall remains weak. For the week of February 13, MTO plant capacity utilization was 84.08%, up 1.34 percentage points week-on-week but down 3.07 percentage points year-on-year. While some units have restarted, others remain idled or operating at reduced rates. MTO production margins are deeply negative, with the latest data showing a loss of 1,039 yuan per ton for methanol-based units in East China, constraining any significant increase in operating rates due to economic pressures.
Influenced by the Spring Festival holiday, most downstream industries exhibited seasonal weakness, with generally lower operating rates significantly dragging on methanol demand. Specifically, operating rates for acetic acid, dimethyl ether, and formaldehyde plants declined, with formaldehyde, heavily impacted by the real estate sector, showing the largest drop among traditional demand segments. MTBE plant operating rates in Shandong were relatively stable, supported by steady gasoline demand recovery, providing some support for methanol demand. However, the post-holiday restart progress is slow, and demand has not fully materialized. Overall, traditional downstream demand remains in a seasonal trough. A slow recovery is expected as enterprises gradually resume operations, but effective demand pull is unlikely in the short term, leaving overall demand weak.
Regarding inventory, overall social inventory remains at high levels. For the week of February 13, domestic methanol social inventory was 1.7726 million tons, a slight decrease of 7,400 tons week-on-week but an increase of 303,100 tons year-on-year. The high inventory level reflects that the loose supply-demand balance has not fundamentally improved. Port inventory was 1.4322 million tons, increasing by 21,100 tons week-on-week and 462,700 tons year-on-year. The continued accumulation is primarily due to slowed outflow caused by maintenance and slow restarts at key downstream MTO plants, despite some contraction in import arrivals. Producer inventory was 340,400 tons, decreasing by 28,500 tons week-on-week and 159,700 tons year-on-year, showing a clear destocking trend as producers actively reduced inventory before the holiday. Downstream enterprise inventory was 200,200 tons, increasing slightly, mainly due to pre-holiday stockpiling. The current methanol inventory structure is clearly differentiated, with high port inventory remaining the core issue. While port destocking is anticipated as downstream demand recovers and import contraction materializes, inventory pressure will continue to constrain methanol price gains in the short term.
On the cost side, both coal-based and natural gas-based methanol units are operating at a loss, while coke oven gas-based units are marginally profitable. The cost for coal-based methanol is primarily anchored to coal prices. Before the holiday, domestic thermal coal prices rose, mainly due to voluntary production cuts in Indonesia leading to tight seaborne coal supply in the Asia-Pacific, which supported domestic coal prices. Post-holiday, supply is gradually recovering. Demand-wise, warmer-than-average temperatures across most regions during the holiday reduced residential and industrial power loads. Coal inventory levels at power plants are higher than the previous year, reducing the impetus for large-scale restocking. While a cold snap affected some regions, its impact is weakening, and above-average temperatures are expected to persist, limiting residential power load growth. The main demand increase will come from industrial resumption, but the market is gradually entering a consumption off-season. For non-power sectors, operating rates at coal chemical enterprises remain high, while demand from the building materials sector is limited. Overall, coal supply is gradually recovering while demand is expected to weaken, suggesting prices will trend weaker, but issues with Indonesian exports will limit the downside.
Macroscopically, international crude oil prices showed a volatile upward trend around the Spring Festival. The WTI front-month contract rose from $60.65 per barrel on February 13 to $66.29 on February 23. Core reasons include OPEC+ decisions to maintain production levels, supporting prices, coupled with steady global demand recovery. Geopolitical risk premiums from US-Iran tensions further pushed prices higher. As a core pricing anchor for the chemical sector, rising crude oil prices directly buoyed sentiment across the sector. Chemical products generally exhibited a firm tone, with aromatics and olefins, more directly linked to crude, showing larger gains. Methanol, as a basic chemical feedstock, while less directly correlated than aromatics or olefins, also experienced price increases due to overall sector sentiment and indirect cost transmission. The impact of rising crude oil on methanol prices is primarily sentiment-driven. Sustained crude gains could further boost chemical sector sentiment and support methanol prices, while a crude price retreat would exert downward pressure.
The core contradiction in the current methanol market lies between weak industrial fundamentals and strong macro-level disturbances. The landscape features ample domestic supply potentially reaching new highs, tight overseas supply, seasonal weak demand showing slow post-holiday recovery, high port inventory constraining upside, stable cost support with divergent profits, and generally positive macro sentiment with geopolitical disruptions. Multiple factors are intertwined, making a clear unilateral trend unlikely in the short term, with prices expected to oscillate with a firm bias. In the near term, as downstream enterprises gradually resume operations post-holiday, demand from MTO and traditional sectors is expected to recover steadily. Combined with geopolitical premiums from Iran tensions, supportive sentiment from rising crude oil, and the anticipated realization of import contraction, methanol prices are likely to trade firmly. Resistance is seen around 2,350-2,400 yuan per ton. However, if downstream demand recovery falls short of expectations, port destocking proves difficult, and Iran tensions ease leading to restored import supply, methanol faces potential correction pressure. This analysis is for reference only.