China Methanol Price Expected to Retreat in Q2 After Advancing in Q1
In Q1 2025, China’s methanol market prices fluctuated upwards. Taking the price in Inner Mongolia as an example, the quarterly average price was RMB 2,133/mt, up 3.04% QoQ and up 6.12% YoY. The major factors supporting methanol prices include the sustained shutdown of some methanol units in the Middle East, the periodical methanol purchasing from some inland and coastal olefin enterprises, the maintenance of some inland methanol units, and the profit recovery of some downstream products.
On the supply side, China’s total methanol supply volume is predicted to record 24,237.7kt in Q1 2025, down 0.48% QoQ and down 4.71% YoY. Thereinto, the domestic methanol output is estimated at 22,073.7kt, up 3.79% YoY. The high industry operating rate following coal price declines and the release of newly added capacity both led to methanol output growth. However, influenced by the long-term production outages of some overseas units, China’s methanol import volume in Q1 is projected to decrease by 29.89% YoY to 2,164kt, resulting in the maintenance of some coastal olefin units and bolstering the coastal market prices to run at a high level.
On the demand side, China’s total methanol demand volume is estimated at 24,257.7kt in Q1 2025, down 1.89% YoY. Although the declined profits of some traditional downstream products and the maintenance of some coastal olefin units weakened the overall methanol demand, the export volume increase effectively eased the inventory pressure at ports. Moreover, benefiting from the drops in coal prices, the profits of CTO units improved, bringing methanol purchasing of some olefin enterprises. In addition, the profit of MTBE rallied somewhat, also supporting methanol demand to some extent.
In Q1 2025, the methanol producer inventory stayed at a relatively low level in the recent five years and showed a trend of falling after rising on the whole. The lowest point occurred in early January at 382.6kt, and the highest one was 602.3kt in end-January. Comparing inventory and price during the year, the two showed a negative correlation most of the time, which is in line with the historical law. Market demand is the main driving factor leading to smooth destocking and high prices. Since March, the market has gradually tilted from the buyer’s market to the seller’s market. Some methanol producers began to take maintenance as scheduled, and product inventory remained low. The periodical supply tightness resulted in high market prices.
Looking ahead to Q2 2025, the methanol market supply and demand relation is anticipated to transition from a tight balance to a loose supply. Methanol prices may fluctuate downwards on the whole, but the decline may be relatively limited. Taking the monthly average price in Inner Mongolia as an example, from April to June, it is expected to be RMB 2,170/mt, RMB 2,120/mt and RMB 2,110/mt, respectively.
Specifically, on the supply side, the import volume in Q2 is expected to recover, and the arbitrage window between inland and coastal markets may remain closed for most of the time, which has limited support for inland market prices. In addition, methanol profits may remain considerable on weak coal prices, supporting methanol producers to maintain high operating rates, so the market supply is sufficient. On the demand side, according to the seasonal law of downstream consumption, traditional downstream demand entering the off-season, coupled with lower downstream users’ acceptance of high prices, will reduce the overall methanol demand. In such a climate, methanol prices may fluctuate downwards in Q2. However, due to the unexpected maintenance of some methanol units and the methanol purchasing of some olefin enterprises, the price decline may be relatively limited.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
Please click "Read more" for the full article.
