SunSirs: Methanol Market Clouded by Uncertainty in the Second Quarter

In early 2026, the methanol industry’s hopes for a return to stable demand for derivatives were dashed as the conflict in the Middle East continued to escalate; rising energy costs and disrupted trade flows severely impacted the methanol derivatives market. Rich Sumner, CEO of global methanol leader Methanex, recently stated that due to the effective closure of the Strait of Hormuz, 18 to 20 million metric tons per year of methanol supply from the Middle East has been restricted, casting a shadow over the global methanol market in the second quarter.

During the company’s Q4 2025 earnings conference call, Sumner said: “Iran supplies 9 to 10 million metric tons of methanol to the market annually; if we add Saudi Arabia, Qatar, Bahrain, and other affected countries, another 9 to 10 million metric tons of methanol supply is impacted. The total global methanol market is approximately 110 million metric tons, but actual international trade volume is only about 55 million metric tons. “Currently, all these trade flows have been completely disrupted.”

ICIS supply-demand data shows that methanol is Iran’s largest chemical export, with exports exceeding 9 million metric tons in 2025, while Saudi Arabia’s methanol exports also approach 4 million metric tons. ICIS data indicates that in 2025, Iran’s methanol was primarily exported to China, with small volumes going to India; Saudi Arabian supplies, meanwhile, were sold to China, India, the EU, and other regions worldwide.

Samner noted that how buyers secure alternative supplies will determine how long their plants can remain operational. Samner stated that the escalation of the Middle East conflict has created significant uncertainty for methanol supply, driving sharp increases in spot prices across the Asia-Pacific and Europe. Transaction prices in the Chinese market have surpassed $300 per ton, while European spot prices are nearing $400 per ton.

Overall, in the methanol market, supply risks and rising energy costs have become the core concerns for the second quarter, with the market recently focusing on upward price pressures and the risk of shrinking demand.

A European methanol producer commented: “Last year, methanol contract prices in Europe reached €700 per ton in the first quarter, which did lead to some reduction in demand but did not cause the industry to grind to a halt. As long as methanol prices can be kept around €600 per ton, there is no need to worry about demand being damaged. However, the reality is that the situation in the Middle East will clearly drive up natural gas and electricity costs, and the impact of this on our pricing may even exceed the impact of changes in methanol prices themselves. "Methanol trade in Europe is likely to remain stable in the second quarter, with supplies primarily coming from the Americas, but the availability of feedstock will be the key factor. In Asia, the ongoing escalation of tensions in the Middle East and disruptions to shipping through the Strait of Hormuz have directly severed the main supply artery for Asian methanol. With Middle Eastern methanol supplies cut off, prices in major consumer markets such as India, Southeast Asia, and China have surged significantly.

Methanol is primarily used in the production of formaldehyde, methyl tert-butyl ether (MTBE), and acetic acid, with smaller quantities used in the production of dimethyl terephthalate (DMT), methyl methacrylate (MMA), methyl chloride, methylamine, methyl ethylene glycol, as well as in the fuel sector for dimethyl ether (DME), biodiesel, and direct gasoline blending. The rise in methanol prices has also been passed on to these products. In the coming weeks, the geopolitical situation will become the focus of attention across the entire methanol industry chain, and demand for methanol derivatives in the second quarter will also be reassessed.

In the MMA market, demand remains stable but sluggish, primarily due to weak performance in end-user industries. The market anticipates that warmer weather in the second quarter will drive a recovery in downstream sectors such as construction, thereby boosting demand. Against a backdrop of closed or only slightly open arbitrage windows and high import risks, the MMA market should have continued its trend of tight supply and rising prices; however, the conflict in the Middle East has introduced significant uncertainty into the MMA market, which is highly dependent on imports. Soaring energy prices and rising freight costs, coupled with delayed import shipments and extended delivery cycles, have sparked market concerns and driven prices higher.

In the acetic acid market, the closure of the Strait of Hormuz has made it extremely difficult for Saudi Arabia’s Sipchem Jubail plant to export acetic acid; however, as the company holds a small market share in Europe, the overall impact is limited. Acetic acid prices are primarily determined by supply and demand, but in extreme cases, they can also be influenced by upstream costs; the rise in natural gas and energy prices triggered by the Middle East conflict will increase acetic acid production costs. As end-user demand remains weak and logistics issues caused by winter storms ease, the acetic acid market is likely to return to a state of oversupply in the second quarter.

For the entire methanol and derivatives industry chain, the market outlook for the second quarter is increasingly dominated by geopolitical uncertainty rather than a recovery in demand. Although fundamentals for most product markets are stable heading into early 2026, with moderate expectations for a seasonal uptick, renewed cost volatility, shipping disruptions, and supply security concerns stemming from the Middle East conflict cast a shadow over the global methanol and derivatives market in the second quarter.

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