Resumption of 60%-70% of operations, monthly production of 900,000 tons! Iran's methanol production resumes in stages

I. Event Background: Early Geopolitical Conflict Caused Global Methanol Supply Contraction

In the second quarter of 2026, the geopolitical conflict between the US and Iran continued to ferment, shipping controls in the Strait of Hormuz tightened, and about one-third of global seaborate methanol trade was obstructed. As the world's second-largest methanol producer and a core exporter of low-priced sources, Iran has a total national methanol capacity of 17.16 million tons. Due to shipping risks and feedstock supporting issues, more than half of the domestic methanol production units in the country collectively reduced loads or even shut down entirely, causing monthly export volumes to plummet from the normal 800,000-900,000 tons to less than 200,000 tons.

Iran's natural gas-based methanol possesses extreme cost advantages (cost per ton is only 700-1,200 yuan). The domestic MTO, formaldehyde, and plastic industry chains are highly dependent on imported sources from the Middle East. The interruption of Iranian exports in the second quarter directly pushed up the geopolitical risk premium for global methanol. Domestic coastal methanol port inventories fell to recent lows, and domestic and overseas methanol spot and futures prices continued to strengthen. Methanol in the US Gulf of Mexico saw a single-month increase of over 12%.

II. Current Core Changes: Situation Eases, Strait Navigation and Units Repaired Simultaneously

In mid-to-late June, the US and Iran reached a phased memorandum of understanding. The Strait of Hormuz gradually relaxed the passage of merchant ships, and shipping safety risks subsided significantly. Coupled with the International Maritime Organization coordinating the dredging of stranded vessels, the implicit methanol inventory in floating storage stranded in the Persian Gulf gradually became eligible for outbound shipment. Driven by positive factors, Iranian methanol plants initiated a phased resumption of production:

Operation Recovery Progress: By early July, half of Iran's methanol units completed restarts, the overall industry operating rate rebounded to 60%-70%, and monthly output recovered to around 900,000 tons. There are still idle units planned to resume successively in August, with the pace of capacity release steadily rising;

Concentrated Shipment of Existing Stock: The backlog of methanol stranded in floating storage in the Persian Gulf for the previous 2-3 months was simultaneously loaded and shipped out. The ocean voyage takes about 20 days, so cargo ships departing in late June will arrive at major global consumer ports concentratedly from late July to August;

Divergence of Export Flows: Low-priced Iranian sources are prioritized for shipment to premium markets like India and Southeast Asia, while the remaining large volume of goods flows into China and the US, the two core consumption regions, completely reversing the supply shortage pattern of the second quarter.

III. Direct Impact on Domestic and Overseas Market Prices

US Gulf Methanol Market First to Bear Pressure

The geopolitical risk premium completely dissipated, coupled with the realization of expectations for low-priced methanol imports from Iran. In the first week of July, US Gulf methanol prices fell by 4.85% week-on-week. Downstream formaldehyde, MTBE, and coating plants held a strong wait-and-see sentiment on purchasing, and traders actively lowered their offers. The market expects that after large volumes of Middle Eastern sources arrive at ports in July and August, US Gulf methanol will continue to show weak performance, with profit margins continuing to compress.

Reversal of Domestic Methanol Supply and Demand Expectations

Estimated domestic methanol imports in July rebounded significantly to 750,000-1 million tons, nearly doubling from June. Ports in East China and South China are about to shift from continuous destocking to accumulation. The logic of supply contraction that previously supported rising methanol prices is gradually crumbling. The traditional off-season demand for MTO downstream further limits the upside room for feedstock. Domestic methanol futures prices are oscillating weaker, and traders are lowering prices in advance to destock.

IV. Summary of Medium-to-Long-term Industry Impacts

Trade Pricing Restructuring: Iran's low-cost methanol continues to flow back into the global market, reshaping the bottom of global methanol prices. The high price range formed in the second quarter due to geopolitical conflicts is difficult to maintain; feedstock costs for the plastic and formaldehyde industry chains in the Middle East and Southeast Asia are falling simultaneously;

Widening Regional Price Spreads: Low-priced Middle Eastern sources impact the Southeast Asian market, and Saudi Arabia has simultaneously lowered its export quotes for PE and methanol, intensifying competition in the Asia-Pacific chemical trade;

Risk Warning: The current US-Iran ceasefire is only a phased arrangement, and the stability of Strait navigation is weak. If geopolitical friction escalates again, the pace of methanol unit resumption and maritime logistics will once again be obstructed, and there is a risk of repeated volatility in the market trend.