Introduction: Over the past decade, major macroeconomic events have occurred every one to two years, indirectly impacting methanol supply and demand fundamentals. These events have become the core logic driving methanol price fluctuations. The Middle East situation has persisted for six months. Since the outbreak of conflict, a total of 1.6242 million metric tons (mt) of methanol from key Middle Eastern regions have been shipped to China, representing a year-on-year decrease of 66.87% compared to 2025. Consequently, coastal inventory levels in China have fallen by approximately one million mt from their highs. Current methanol prices are at historical highs, second only to the period during the coal price surge in 2021.
Actually, since late August, coal prices have also risen sharply in tandem. According to Chempricehub statistics, delivered coal prices in some main production areas of Inner Mongolia increased from 740 yuan/mt to a peak of 950 yuan/mt. This rise has concurrently supported the strong performance of methanol prices over the past month. This week, as prices accelerated upward, olefin margins rapidly contracted, leading to negative feedback from some end-users. Coupled with the potential restart of methanol plants in certain production regions in the second half of the month, the basis between inland and coastal markets may weaken subsequently. Given that inland prices have recently surged more aggressively than coastal prices, regional price spreads have appeared somewhat distorted; therefore, an initial correction in inland prices is a normal market adjustment.
However, looking at the Jiangsu and Zhejiang regions, despite one olefin unit restarting and traditional downstream sectors maintaining rigid demand, the current import supply status continues to create a difficult supply-demand deadlock. Coastal areas are likely to remain in a shortage state. As port tradable inventories continue to decline over the coming weeks, attention must be paid to the recovery of existing inland supplies and the realization of new supply additions. Traditional downstream demand will enter its off-season in the fourth quarter. Market participants should closely monitor changes in the price spread between inland and port markets to determine whether supply shortages will continue to suppress demand or if significant weakness in inland markets will emerge, allowing arbitrage flows to replenish coastal stocks.
With the delivery month for the October futures contract approaching, how can the significant premium of coastal spot prices over futures prices be resolved under the logic of convergence? According to Chempricehub forecasts, port inventories are highly likely to draw down to historic lows by the turn of the month. The contradiction between absolute high prices and elevated coastal basis cannot easily be resolved through negative demand feedback from inland markets. In summary, Chempricehub believes that coastal regions remain trapped in a supply-demand deadlock. High basis levels will limit the downside space for futures prices, while any pullback in inland prices would represent a normal regression of regional price spreads. Close attention should be paid tomorrow to developments in talks among Gulf states.
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