Weak Methanol Market Continues in August in China

August 29, News

According to the commodity market analysis system, from August 1 to 29 (as of 15:00), the average price of methanol in the East China port market in China fell from 2,389 CNY/ton to 2,241 CNY/ton, a decrease of 6.17% during the period and a year-on-year decrease of 10.18%.

At the beginning of the month, the Chinese methanol market showed signs of recovery. Olefin plants in Northwest China increased their external purchases, coupled with some facilities still undergoing maintenance and low inventory levels among companies, which had a positive impact. Upstream companies maintained their prices for sales, and downstream companies followed passively.

In the early part of the month, the Chinese methanol market mainly rose. Local supply maintenance and increased domestic olefin production, coupled with low inventory levels among companies, led to a tight supply of tradable goods, causing companies to hold prices firm and be reluctant to sell. Traders, influenced by the rising prices, actively followed the upward trend, while downstream buyers were forced to purchase at high prices.

Mid-month, the methanol market in China showed some differences between regions. Driven by macro policies, inland areas were stronger than ports, providing some support to prices. The port methanol market expected high levels of imports, and the expectation of rapid inventory accumulation put strong pressure on the market.

In the latter half of the month, Chinese methanol plants resumed operations, but support in the mainland market remained somewhat weak, with buyers reluctant to commit at higher prices.

As of the close on August 29, the methanol futures closing price on the Zhengzhou Commodity Exchange in China fell. The main contract of methanol futures 2509 opened at 2373 CNY/ton, with the highest price at 2385 CNY/ton and the lowest at 2357 CNY/ton, closing at 2361 CNY/ton, a decrease of 7 yuan or 0.30% from the previous trading day's settlement. The volume traded was 419,697 lots, with open interest at 821,019 lots, an increase of 35,186 lots from the previous day.

Methanol Spot and Futures Comparison Chart:

As of August 29, the summary of methanol market prices in various regions of China:

Cost Perspective: Coal supply remains ample, while inventory declines have slowed down. As a result, prices are trending weaker and may face some downward pressure, weakening cost-side support. The cost outlook for methanol is leaning toward bearish factors.

Coal/Steam Coal (Upstream Raw Material) - Methanol Price Trend Comparison Chart:

Demand Side:
Glacial acetic acid: The glacial acetic acid market is experiencing localized price increases. Formaldehyde: The formaldehyde market remains stable with a slight upward trend. In major production regions, some factories are eager to reduce inventories, leading many to maintain weakly stable pricing amid low demand. Dimethyl ether: The dimethyl ether market is operating steadily. Supported by relatively strong methanol prices—due to higher costs—and constrained supply, dimethyl ether volumes have improved significantly compared to earlier periods, bolstered by the product’s inherently limited availability. Meanwhile, most downstream products have softened as methanol prices decline, weighed down by bearish factors in methanol demand.

Methanol-Acetic Acid (Downstream Product) Price Trend Comparison Chart:

Methanol-MTBE (downstream product) price trend comparison chart:

Supply side, Shanxi Yaxin, Shanxi Coking, Shanxi Linxin, Xiaoyi Pengfei, Xinxiang Zhongxin, and Shaanxi Changqing are undergoing plant maintenance; while Shaanxi Changqing, Chongqing Wanlilai, Shanxi Orchid, Yunnan Jiehua, Inner Mongolia ENN, Shaanxi Shenmu, and Inner Mongolia Yigao have resumed operations. The overall recovery volume is greater than the loss volume, leading to an increase in the capacity utilization rate. The supply side of methanol is affected by bearish factors.

On the international front, as of the close on August 28, the CFR Southeast Asia methanol market closed at $321.5–$322.5 per ton. Meanwhile, the FOB U.S. Gulf methanol market ended at 94–95 cents per gallon, while the FOB Rotterdam, Europe methanol market closed at €287.5–€288.5 per ton, up by €1 per ton.

Market Forecast: Recently, there has been a slight increase in the reverse flow of coastal cargo volumes. Meanwhile, maintenance projects in domestic production regions are resuming more intensively, and some olefin producers have reduced their reliance on external methanol procurement. As a result, domestic production areas may experience a gradual weakening trend—stay tuned for adjustments in freight rates.

Methanol Analysts Expect: China’s spot methanol market to remain weak and consolidate in the near term.