SunSirs: Mixed Fundamentals Point to High-level Volatility for Methanol Futures

Driven by geopolitical factors, methanol futures prices have fluctuated and moved upward recently. However, with the cooling of geopolitical risks, methanol futures premiums gave back a rapid gain yesterday. Currently, the methanol futures market is facing concerns about the successive restart of domestic plants, abundant import arrivals and weak downstream demand. It is expected that the follow-up upside momentum will be weak in the future, and the market may shift to a high-level fluctuation trend.

Maintenance Devices Restart One After Another

On the supply side, China is still in the stage of centralized summer maintenance at present. Relevant data show that since August, multiple large and medium-sized methanol plants in the northwest, north China and east China regions have undergone centralized maintenance. The national methanol capacity utilization rate has dropped significantly compared with July, the output in major producing regions has contracted month-on-month, and some plants have also experienced unplanned shutdowns, further reducing the circulation volume of commercial methanol. Factories are under little inventory pressure, the performance of long-term contracts is good, and the spot quotes in inland areas are relatively firm. However, starting from late August, some maintenance plants have resumed operation one after another, and there is an expectation of recovery in domestic supply. In terms of costs, the cost support for coal-to-methanol enterprises is acceptable, and enterprises are under little pressure from losses. If profits continue to recover, some plants may increase their operating rates to offset the supply contraction caused by maintenance.

China's methanol imports are highly dependent on the Middle East. The stalemate in the US-Iran situation continues, and shipping risks in the Strait of Hormuz remain. The market has a strong expectation that September import volumes will shrink. However, in the short term, the ships that were previously stranded due to typhoons and shipping delays are arriving at ports in a concentrated manner, resulting in a short-term replenishment of supply sources.

Divergence between Port and Inland Inventories

Recently, the inventory structure of domestic methanol has shown a clear differentiation, with the inventory trends in inland areas and ports being completely different. Affected by plant maintenance and smooth shipments, factory inventories in inland areas have continued to decline, providing support to spot prices. Relevant data shows that in the week ending August 21, 2026, China's inland methanol inventory stood at 326,100 tons, a slight month-on-month decrease. Coastal ports are under pressure of inventory accumulation due to concentrated arrivals. Although the absolute inventory level has not yet reached a historical high, the increase in arrivals will suppress the room for a rebound in port spot prices.

Relevant data shows that in the week ending August 21, 2026, the methanol inventory at ports in East and South China reached 518,700 tons, a sharp month-on-month increase. The tradable inventory at ports directly affects the trend of the spot basis, serving as an important window to observe the linkage between the futures and spot markets.

Demand Is Pending Recovery

The largest demand for methanol is methanol to olefins (MTO). Recently, multiple MTO units have undergone maintenance and reduced their operating loads, leading to a decline in methanol consumption. Some units are scheduled to restart from late August to September, but their actual restart progress and processing profits will determine their purchasing volume. The operating rates of traditional downstream industries such as formaldehyde and acetic acid vary. The operating rate of the acetic acid industry has increased slightly, while the overall operating rate of the formaldehyde and dimethyl ether industries has seen limited growth due to the off-season at the terminal. Downstream enterprises have become more resistant to the rise in raw material prices, mostly maintaining purchases for just-in-demand purposes with weak willingness for speculative inventory replenishment.

Terminal orders show no obvious improvement, restricting the consumption of methanol by traditional downstream sectors. The current market expects downstream operating rates to rebound after the high temperature subsides, but the realization of the peak season remains to be verified. If terminal demand recovery falls short of expectations, the methanol market may face the risk of negative feedback.

In summary, the current methanol market is in a state of mixed bullish and bearish sentiment. Domestic plant maintenance and geopolitical risks have brought expectations of a contraction in imports, while low inventories in the inland areas have formed a bottom support for prices. However, the concentrated arrival of short-term imported cargoes and weak downstream demand have limited its upside. It is expected that methanol futures will maintain a high-level fluctuating trend in the later period.

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