【Introduction】: Although macroeconomic factors continue to cause volatility in the domestic methanol market, the overall trend shows a retreat of geopolitical premiums, with market focus gradually shifting back to fundamental realities. The premium driven by earlier geopolitical factors, such as restrictions on passage through the Strait of Hormuz, has clearly reversed. However, low base levels of port methanol inventories, combined with sustained declines in inland producer stocks, have kept actual domestic tradable volumes at low levels, providing strong support for domestic methanol prices. Currently, the market is in a stalemate characterized by "limited downside and restricted upside," with changes in upstream and downstream units becoming key influencing factors.
1. Supply Side
Regarding domestic supply, current profit margins for methanol producers are relatively attractive. Consequently, only facilities in Southwest China are scheduled to shut down from late November to early December due to cold weather conditions prioritizing feedstock supply for civilian use. No shutdown expectations exist for other units. Additionally, new capacity is coming online, leading to an expected gradual recovery and increase in domestic methanol production.
2. Import Supply
The situation regarding passage through the Strait of Hormuz remains critical, though no immediate prospects for restoration are visible. Based on current vessels in transit, weekly methanol import volumes are expected to remain above 100,000 tons over the coming weeks. This represents an increase compared to October levels. Furthermore, continuous supply replenishment from inland areas to coastal markets indicates that port methanol inventories are entering a period of "slow accumulation."
3. Demand
Currently, Methanol-to-Olefins (MTO) units in the Jiangsu and Zhejiang regions remain shut down, sustaining weak apparent demand in coastal markets. Traditional downstream sectors are primarily engaged in rigid-demand procurement. Looking ahead, the expectation of restarts for some units provides partial support to holders' willingness to retain inventory. As a result, the market continues to operate in a stalemate, pulled between low supply and low demand.
4. Inventory
Since the National Day holiday, domestic methanol producer inventories have continued to decline, providing strong impetus to the inland methanol market. In the short term, as methanol production increases, inland producer inventories may rise; however, specific trends will depend on factors such as off-take volumes by enterprises.
Recently, port methanol inventories have been in a slow accumulation cycle and are projected to potentially reach approximately 600,000 tons. From a storage capacity perspective, port methanol inventories remain at low levels. While this has somewhat alleviated the tight supply situation, the low inventory base continues to provide support to the market.
5. Summary
Overall, market supply is expected to recover and increase slightly, while demand remains weak in the short term. Consequently, total domestic tradable methanol volumes may see a modest recovery. Key variables to monitor include the expected restarts of downstream units and the commissioning pace of upcoming upstream and downstream projects, both of which will significantly impact methanol market fundamentals.
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