SunSirs: Methanol Market Showed Signs of Recovery Amidst Fluctuations

Price trends

According to the commodity market analysis system of SunSirs, from July 3 to July 10 (as of 15:00), domestic methanol quotes at East China ports rose from 2,518 RMB/ton to approximately 2,613 RMB/ton. During this period, prices increased by 3.77%; however, they fell by 22.15% month-on-month and rose by 9.00% year-on-year. The port methanol market strengthened; earlier expectations of increased import volumes had already been priced in, and port inventories dropped to a yearly low during the period, resulting in limited market liquidity. Coupled with potential weather-related impacts on unloading speeds and geopolitical factors, the coastal methanol market generally maintained a strong trend.

As of the close of trading on July 10, methanol futures on the Zhengzhou Commodity Exchange closed lower. The main methanol futures contract (2609) opened at 2,500 RMB/ton, reached a high of 2,505 RMB/ton and a low of 2,447 RMB/ton, and closed at 2,480 RMB/ton; this represented a decline of 22 points (or 0.88%) from the previous trading day's settlement price. Trading volume stood at 997,475 contracts, open interest was 656,522 contracts, and the daily change in open interest was -7,099 contracts.

Summary of methanol market prices by region as of July 10:

Market Analysis

Regarding costs, downstream coal-consuming enterprises have shifted to purchasing strictly based on immediate needs; sluggish trading during the off-season has hindered activity, and falling prices have failed to drive up methanol prices. Consequently, cost-side factors are exerting downward pressure on methanol prices.

On the demand side, looking at downstream sectors, market prices for glacial acetic acid remain largely stable; the formaldehyde market has stabilized, though with some localized declines; and the dimethyl ether market is operating steadily. Prices for most downstream products are influenced by methanol prices, with demand-side factors for methanol leaning towards the positive.

Regarding supply, maintenance is underway at facilities operated by Shanxi Lanhua, Inner Mongolia Rongxin, and Sinopec Great Wall; meanwhile, operations have resumed at plants owned by Xinjiang Xinye, Shandong Lianmeng, and Shanxi Lanhua, and two previously curtailed units in Inner Mongolia have restarted. Overall, the volume of lost output exceeds the volume of restored production, resulting in a decline in both total output and capacity utilization rates. These factors are exerting a bullish influence on the methanol supply landscape.

In overseas markets, as of the close on July 9, methanol prices settled at $424-426/tonne CFR Southeast Asia. Prices stood at 130-132 cents/gallon FOB US Gulf and €397-399/tonne FOB Rotterdam (Europe).

Market Outlook

Methanol producers remain active in moving stock, while downstream demand continues to be rational; consequently, prices are largely fluctuating within a narrow range, characterized by a standoff. Overall, SunSirs methanol analysts anticipate that the domestic methanol spot market will primarily undergo a period of consolidation.

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