【Lead】: The core drivers influencing the methanol market have seen little recent change. The primary theme remains the global supply issues stemming from strait blockades due to geopolitical conflicts, while the secondary theme involves the marginal changes in methanol itself against this broader backdrop. Crude oil prices remain elevated, significantly lifting the price floor for energy and chemical products. Price transmission along the industrial chain is now the most critical factor determining whether commodity prices can sustain their strength.

Currently, shipments from key Middle Eastern regions can still pass through the strait under certain conditions. Approximately 220.8k tonnes of methanol were shipped in March, with an estimated 80k tonnes potentially shipped in early April (other vessels may also be in transit). For non-Iranian cargoes, arrivals are expected to increase in April but are projected to drop again to low levels by May. Based on comprehensive estimates from chempricehub, methanol import supply in April may rebound to around 629.4k tonnes, an increase of approximately 204.5k tonnes compared to March.

Comparison of Methanol Producer Inventory Trends

Data source: chempricehub

The flow of domestic cargoes to coastal regions has led to a continuous decline in producer inventories for four consecutive weeks in March. Inventories within the sample have decreased from 535.3k tonnes to 414k tonnes. Coupled with the traditional downstream sectors in South China struggling to keep up with high prices earlier, apparent methanol import demand in coastal areas weakened significantly in March. This is likely to affect the destocking pace in April to some extent. Furthermore, with import supply in April expected to rebound compared to March (currently, there are almost no planned arrivals at non-mainstream ports observed for April), the overall destocking intensity in April is anticipated to be weaker than in March.

Seasonal Comparison of Apparent Methanol Import Demand in Coastal Areas (k tonnes)

Data source: chempricehub

Of course, we do not deny that export volumes in April will be substantially higher than in March. Historically rare arbitrage opportunities for exports are supporting ongoing discussions for transshipment and exports from China's coastal areas, making this a core factor influencing the destocking magnitude in April. As long as the strait does not resume normal operations, the need for US dollar-denominated contracts to supplement Asian demand will continue to support export negotiations. However, close attention must be paid to how exports of Chinese downstream products suppress overseas downstream sectors, thereby affecting their acceptance of high-priced methanol.

Looking at traditional downstream sectors, exports of acetic acid and its derivatives have supported a recovery in acetic acid production margins to around RMB 1,500/tonne. Formaldehyde shows marginal improvements, with production margins recovering notably. Recent formaldehyde price increases have been relatively smooth, driven by active inquiries as downstream board manufacturers' raw material inventories near depletion. With low factory inventories and no sales pressure, formaldehyde plant operating rates and output have increased, with potential for further rises.

Weekly Comparison of Formaldehyde Operating Rates

Data source: chempricehub

Domestic methanol production operating rates have stabilized around 90.5%-92.5%, with limited room for further increases. As inventories in production areas continue to decline due to the outflow of domestic cargoes, arrivals at non-mainstream ports are expected to increase in the coming months. The price retracement just before the Qingming Festival also supported improved import cargo transactions, which may help apparent import demand recover somewhat in the near future. chempricehub anticipates that if geopolitical conflicts persist, even if supply from key Middle Eastern regions recovers somewhat, it will likely remain below normal levels. Given the current operating rates of coastal olefin plants, destocking is expected to continue, and prices may maintain strong, wide-ranging volatility.