Since December, methanol futures and spot markets have shown a pattern of initial decline followed by stabilization. The MA2601 contract opened at 2,134 yuan/ton at the beginning of the month, briefly surged to 2,164 yuan/ton before retreating, but did not break below the previous low of 1,988 yuan/ton. In contrast, the traditionally stronger contracts (MA03, MA04, MA05) underperformed, with MA05 falling below its prior low of 2,127 yuan/ton. This weakness stemmed from the market fully digesting news of Iranian plant shutdowns, coupled with ample domestic supply, weak MTO demand, and overall loose supply-demand dynamics. Pressure from fund rotation further weighed on far-month contracts. By mid-month, prices rebounded as port inventories declined and overseas plant maintenance increased, reducing import expectations. However, bearish sentiment persisted, with intensified battles between bulls and bears over inventory and demand, leading to another downturn last Friday.
Spot markets showed divergence. Port prices rose amid weak demand and tightening overseas supply, though downstream buyers remained cautious. Inland prices were weaker due to high operating rates, strong sales pressure despite manageable inventory levels, and rising winter freight costs, limiting price rebounds. On December 19, import prices in Taicang rose 50 yuan/ton week-on-week to 2,142 yuan/ton, while Guangdong prices gained 40 yuan/ton to 2,105 yuan/ton. Prices in Shaanxi rose 25 yuan/ton to 2,045 yuan/ton, but Inner Mongolia and Sichuan-Chongqing markets fell by 45 yuan/ton and 47.5 yuan/ton, respectively.
**Supply Side: Domestic Output High, Focus on Iran’s Plant Operations** Domestic methanol supply has remained elevated this year, with January-November output reaching 92.8 million tons, up 10.9% year-on-year. November output stood at 8.584 million tons, slightly lower month-on-month but higher year-on-year. Despite seasonal shutdowns of gas-to-methanol plants in southwestern China, coal-based units saw improved margins, keeping overall supply abundant. Capacity utilization reached 90.52% as of December 19, with weekly output at 2.056 million tons, up both month-on-month and year-on-year.
The key variable lies in imports. Overseas plant utilization dropped to 60.51%, with weekly output falling to 882,700 tons. Iran’s winter gas rationing for residential use has forced widespread methanol plant shutdowns, with only FPC and KPC operating normally. The restart of Bushehr’s plant tempered bullish sentiment, but Iran’s domestic unrest—triggered by subsidy cuts and inflation—poses additional risks if strikes spread to industrial facilities or ports.
**Demand Side: Seasonal Weakness Limits Upside** Downstream demand has entered a seasonal lull. MTO operating rates dipped slightly to 89.51%, with losses at methanol-based units in East China (e.g., Ningbo Fulde’s shutdown) capping methanol price gains. Traditional demand was mixed: formaldehyde remained weak amid sluggish real estate activity, while acetic acid exports provided modest support. MTBE demand faced pressure from weaker gasoline blending margins.
**Inventory: High Imports Keep Port Stocks Elevated** Port inventories fell marginally to 1.2188 million tons due to slower unloading rather than reduced arrivals. Producer inventories rose amid transportation disruptions from winter weather, while downstream stocks stayed low on cautious procurement.
**Cost Side: Coal Prices Extend Declines** Coal prices continued to slide, narrowing losses for coal-to-methanol units. Weak demand from utilities and non-power sectors (e.g., construction materials) offset limited supply growth under safety inspections.
**Outlook: Iran-Driven Supply Risks Bolster Prices** The market’s key driver remains Iran’s supply disruptions. With 8 of 11 Iranian plants offline and geopolitical risks escalating, port inventory drawdowns may accelerate in Q1 2025. While high current supply and weak demand (“weak reality”) cap near-term rallies, the “strong expectation” of import tightening supports far-month contracts. Prices are likely to consolidate, with downside limited and upside contingent on Iranian plant updates and inventory trends.
*Analyst: Zhang Chen, Chang’an Futures* *December 22, 2025*
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