Preface: Since mid-May, no methanol vessel from the Middle East has successfully cleared the Gulf of Oman. US-Iran negotiations remain inconclusive, and the two sides clashed again this week. A rebound in crude oil, coupled with continued declines in methanol port inventories, pushed the Taicang spot basis sharply higher to +400 yuan/ton, while the futures price rebounded above 3,000 yuan/ton. However, late Thursday evening, the market faced a new twist: crude oil fell sharply, revisiting recent lows, and the futures price also tumbled from its highs. Yet the Taicang spot basis continued to strengthen, reaching +450 yuan/ton.
According to the latest data, China's methanol imports in June are estimated at around 405,000 tons, with 168,000 tons from the core Middle East region and 237,000 tons from non-Iranian sources. Due to multiple factors—including planned maintenance, margin constraints, and concerns over raw material supply in July—the operating rate of MTO units in East China has further declined this week. Whether this week's port inventory marks a cyclical low will depend on the restart status of certain individual plants. If two more MTO units in the Jiangsu-Zhejiang region resume operations, and given ongoing export orders, coastal inventories could potentially fall below 500,000 tons.
Since 2026, China's methanol sample port inventory has been steadily declining, dropping from 1,537,200 tons at the beginning of the year to 566,100 tons this week—a decrease of 971,100 tons (63.17%). The core driver of destocking remains import supply issues, from Iran's seasonal gas restrictions to the Middle East conflict, which have persistently impacted China's methanol import volumes. In the first six months of 2026, total methanol imports via international vessels are preliminarily estimated at 3.605 million tons, a decline of 1.7346 million tons compared to the first half of 2025. Although a large amount of domestic supply has been arbitraged to the coast during this period, over 600,000 tons of export orders have also been dispatched. In recent weeks, although Asian ex-China prices have fallen from highs—indicating downstream difficulty accepting elevated prices—the Strait remains closed, actual demand persists, and both bonded cargo and some southwest domestic supply continue to be shipped out to fill the gap from Middle Eastern supply.
This morning, a Shandong MTO unit announced a shutdown. Against the backdrop of the traditional off-season, high methanol prices driven by import supply issues continue to suppress some downstream demand. The current industrial driver of methanol—undoubtedly the supply constraint—continues to pressure the demand side. The core logic for the energy & chemical commodity remains the Strait's navigability and whether the momentum can be sustained before the September contract delivery. Chempricehub believes that the current high basis has already made transactions difficult. However, if two coastal olefin plants remain operational, port inventories could still see limited room for further decline. It is expected that before the Strait reopens, methanol prices may continue to fluctuate at elevated levels. Close attention should be paid to the impact of olefin margins on MTO operating rates.
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