Lead-in: The 2026 U.S. midterm elections have concluded, with the Republican Party suffering a significant setback and the Democratic Party gaining control of both the Senate and the House of Representatives. On the evening of November 4, anticipating a de-escalation in the U.S.-Iran conflict, international crude oil prices plunged sharply. At the opening on November 5, long positions were rapidly unwound, causing methanol futures to crash below 3,150 yuan/ton. Despite persistent market rumors, shipments from key Middle Eastern regions within the Persian Gulf remained unchanged. With no significant shifts in methanol’s fundamental supply-demand dynamics, consensus among industry insiders and outsiders holds that the supply-demand balance remains favorable, low inventory levels are unlikely to change soon, and methanol prices have been oversold.
Following the sharp decline, losses for olefin producers narrowed significantly, leading to a marginal improvement in cost-profit structures. This has once again fueled rumors regarding the restart of Methanol-to-Olefins (MTO) units. While we cannot confirm whether these events have materialized, it is undeniable that the current scenario is driving market expectations for MTO unit restarts. During the daytime session on November 6, methanol futures and spot prices rebounded simultaneously. Forward paper cargoes along coastal areas strengthened again, auction prices in inland regions surged rapidly, short-covering demand continued to support premium transactions in production areas, and downstream tender prices in Northern Shandong remained elevated.
We maintain our expectation for inventory accumulation in coastal regions during November, supported by concentrated MTO shutdowns, domestic arbitrage opportunities, and recovering imports. Although Baofeng’s new supply may eventually come online in Q4, and Southwest production areas might adjust gas restriction periods due to exceptionally high profits, traditional downstream demand remains robust. Furthermore, import volumes are unlikely to exceed 500,000 tons. If MTO restarts do occur, they will inevitably lead to renewed inventory drawdowns. Should import supplies rise significantly in the future, several pending MTO projects would also gain the economic incentive to commence operations.
In summary, the methanol market is expected to maintain a bullish trend. Its supply-demand floor remains intact, with medium-term price action likely to oscillate between changes in supply and MTO operating rates. The long-term outlook remains favorable.
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