Introduction: In August 2025, methanol imports approached 1.76 million tons, reaching a historical peak, and remained high from September to December. This pushed port methanol inventories to a near-record high of approximately 1.56 million tons, placing coastal methanol markets under persistent pressure from "high inventory" through early 2026. However, the market reversed in the first quarter of 2026. Geopolitical conflicts coincided with Iran's gas curtailment period, causing imports to drop sharply and remain low. The "high inventory" was quickly depleted to below 500,000 tons, transforming its impact on the methanol market from a suppressant to a support and driver.
I. High Imports in H2 2025 Laid the Groundwork for Inventory Risks
Imports in the second half of 2025 hit record highs. In August, methanol imports approached 1.76 million tons, and from August to December, they remained above 1.3 million tons. The primary reason was that the Middle East, the largest source of imports, maintained high operating rates for its major methanol plants. Combined with weak overseas demand, a large volume of cargo flowed into China. As a result, port methanol inventories reached a historic high of nearly 1.56 million tons in mid-September, staying elevated from August to December.
Under the pressure of high inventories and high market circulating volumes, coastal methanol prices fluctuated downward in the second half of 2025. Mainstream methanol market prices briefly fell below 2,000 yuan/ton in late November, with sentiment driven by pessimism. This situation persisted until February 2026. Although Iran began its seasonal gas curtailment and plant shutdowns in late November, leading to some price rebound, the sustained high inventory kept the rebound modest, and prices remained mostly low.
II. Geopolitical Shock Hits Amid Gas Curtailment in H1 2026
In late February 2026, as the gas curtailment period was ending, geopolitical conflicts escalated in the Middle East. Some international methanol plants that had restarted were forced offline again, keeping operating rates low at major Middle Eastern methanol plants. Subsequently, the blockade of the Strait of Hormuz restricted international logistics, causing methanol import volumes to remain low from March to mid-June. Port methanol inventories rapidly declined to below 500,000 tons. Amplified by market sentiment, prices surged quickly during this period and traded at elevated levels, creating an extreme contrast with the second half of 2025.
From mid-to-late June onward, the conflicts eased, and the Strait of Hormuz reopened. The domestic methanol market shifted back to fundamentals. Fundamentals indicate that major Middle Eastern methanol plants hold high inventories, and floating storage in the Gulf remains elevated. This suggests imports may experience a phased rapid recovery. Port methanol inventories are likely to transition from depletion to accumulation, beginning a restocking cycle. However, in the longer term, attention must remain on the operating rates of international plants after restart and downstream plant operations.
III. Conclusion
The sustained high port methanol inventory levels caused by high imports in the second half of 2025 continued to suppress the market. Expectations also pointed to weak market confidence, leading to a sluggish market performance even during the gas curtailment period. Subsequently, before the market could recover from the curtailment, the shock of geopolitical conflicts rapidly improved market sentiment and expectations, driving prices higher. Later, as actual fundamentals materialized, the support at lower levels was reinforced.
Looking ahead, in the short to medium term, import supply is likely to ramp up quickly, and port methanol inventories will enter an accumulation cycle. However, as the typhoon season approaches, attention should be paid to weather factors affecting unloading schedules. Over the medium to long term, factors such as plant restarts and macroeconomic conditions warrant continued monitoring.
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