Introduction: Recently, the domestic methanol market has experienced a predominantly strong upward price trend, driven by multiple factors including ongoing geopolitical tensions, low import volumes, downstream procurement, and declining inventories.

I. Geopolitical Tensions Restrict Recovery in Methanol Imports

The recent impact of geopolitical tensions on the methanol market is twofold: affecting international shipping capacity and the operational rates of global production facilities. For China's methanol market, this translates into influences on market sentiment and methanol import volumes.

| Figure 1: Weekly Comparison of International Methanol Capacity Utilization Rates, 2024-2026 |
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| Data Source: chempricehub |

As shown in Figure 1 comparing the weekly trends in international methanol capacity utilization, the current year's utilization rate is lower than during the same period in 2024-2025. In those years, the international utilization rate rapidly recovered and rose to high levels from mid-to-late March onward. However, as of this writing, the current international capacity utilization rate remains predominantly low and fluctuating, with significant uncertainty regarding the timing of a recovery for international facilities.

Due to the unrecovered and uncertain restart timeline for international plants, concerns about supply persist in both domestic and global methanol markets. Prices in some international markets have continued to rise rapidly. Consequently, the arbitrage window for shipping methanol from China to surrounding international markets has remained open and is widening. Therefore, China's methanol import volumes are expected to continue at low levels.

II. Strong Downstream Profits Support Methanol Consumption

While methanol prices have risen sharply, raw material costs have seen little change, leading to improved profitability for methanol producers. In this profitable environment, planned maintenance shutdowns for domestic methanol plants have been relatively limited recently, suggesting domestic supply will likely remain high.

| Figure 2: Weekly Profit Comparison for Methanol and Downstream Products in 2026 (RMB/ton) |
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| Data Source: chempricehub |

Downstream product prices have followed the increase in feedstock (methanol) costs, with notable gains. Figure 2 also indicates a significant improvement in downstream profits in March, with most sectors operating profitably. Thus, despite high methanol prices prompting some downstream users to purchase only based on essential needs at lower price points, the overall favorable profit margins have supported good operating rates at downstream plants. Against the backdrop of generally tight domestic methanol supply, this steady essential demand has led to a decline in overall domestic methanol inventories.

III. Continued Decline in Domestic Methanol Inventories

Given the current supply-demand dynamic characterized by tight domestic supply (especially low imports) and robust demand, domestic methanol inventories have continued to decrease.

| Figure 3: Weekly Comparison of Port Methanol Inventory Trends, 2025-2026 (10k tons) |
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| Data Source: chempricehub |

Inventory drawdowns at domestic production plants may be relatively modest, constrained by logistics capacity and already low stock levels at some facilities. Although port methanol inventories have been consistently falling, they remain higher than the same period last year, indicating room for further reduction. While supplies from inland regions supplement the port market, high port prices have led to average truck-based withdrawals from some storage areas. However, trucking capacity limits the volume of inland supplements. Furthermore, the open international arbitrage window supports withdrawals through transshipment and vessel shipments. Therefore, the decline in port methanol inventories may proceed at a relatively faster pace, though the actual rate will depend on changes in withdrawal volumes.

In summary, the domestic methanol market currently remains favorable. However, close attention must be paid to the impact of geopolitical developments on market sentiment and supply-demand expectations. The domestic methanol market is projected to experience wide-range fluctuations.