Weekly Methanol Market Recap: Prices Consolidate Amid Tight Supply

This week, methanol prices experienced volatile consolidation. While a ceasefire agreement has eased market sentiment, the war's long-term market impact and the prevailing trading logic persist. Despite accelerated profit erosion in downstream sectors, methanol prices remain relatively firm against a backdrop of tight supply. The spot import premium has strengthened to +200 yuan/ton against the May contract.

Currently, all Iranian plants remain shut down. The number of vessels passing through the Strait this month is still limited to three (approx. 120,000 tons). Local plant inventories available for loading are likely nearly depleted. While a small number of vessels might still have cargo available, their ability to transit the Strait requires ongoing monitoring. For non-Iranian cargoes, aside from Middle Eastern shipments still blocked by the Strait closure, volumes from other regions continue to shrink due to high overseas prices and significant price inversions. Overall, May import supply is projected to potentially fall below 400,000 tons, which could mark a decade-low for monthly imports.

On the export front, tracked export and re-export volumes for March-May have risen to around 350,000 tons, with April potentially reaching 200,000 tons. Despite the recent cancellation of export tax rebates, attractive export margins have driven monthly export volumes to record highs. This is expected to help rapidly draw down coastal methanol inventories to around 800,000 tons by late April.

Regarding downstream sectors, continued profit compression remains the primary fundamental factor constraining methanol prices. Given low import levels and a tight domestic supply-demand balance, relying solely on sourcing from inland regions is insufficient to maintain normal operating rates for all coastal MTO plants. Expectations of shutdowns due to feedstock shortages persist. Nevertheless, strong exports and rigid demand are still projected to drive coastal inventories lower in May, potentially reaching very low levels.

Market Outlook: Downstream negative feedback and expectations of sustained inventory drawdowns will continue to contend. The situation regarding Strait transit remains the core variable. Methanol prices are expected to maintain a firm, consolidating trend, with the current near-term premium structure seen as largely justified. Close attention should be paid to the potential materialization of previously anticipated delivery warehouses in inland regions.