【Introduction】：This week, the continued destocking at production bases in the methanol-producing regions was unable to withstand weak demand amid the traditional off-season, leading to a strong bearish sentiment among inland market players. In coastal areas, destocking persisted on the logic of low import arrivals, with futures and basis showing a stable to slightly firm trend. Against this backdrop, the arbitrage window for domestic cargo, which briefly closed last week, reopened, continuing to support domestic pricing. Additionally, the firm performance of the front-month contract, bolstered by factors such as strong crude oil prices, caused the June–September futures spread to weaken further, breaking below 100 yuan.

According to statistics from our platform, methanol imports in May are estimated at 315,700 tons, with the Middle East core region contributing 101,500 tons and non-Iranian cargoes contributing 214,200 tons. Imports in June are provisionally assessed at between 500,000 and 550,000 tons. The timeline for the Strait’s reopening remains unclear, making it difficult for imports to recover in the short term. Even with sustained ample domestic supply, there is still considerable room for destocking in coastal regions in the coming weeks. Based on current low apparent demand estimates, coastal inventories could decline to around 600,000 tons by the end of the month or early next month. This expectation has been a key reason supporting some positive carry positions. Since the outbreak of conflict in the Middle East, port inventories have fallen from about 1.44 million tons to around 800,000 tons this week—a destocking of 640,000 tons—but this includes approximately 400,000 tons of exports, highlighting the intense impact of domestic supply.

The strong influx of domestic cargo into coastal areas inevitably coincides with a reduction in domestic demand. Formaldehyde demand in Guangxi, Hunan/Hubei, Southwest China, and southern Shandong has been weak. Arbitrage via truck delivery has triggered interregional flows, ultimately squeezing into East China, also accompanied by some cargo arbitrage via vessel. Acetic acid, which had generated massive profits of 1,500 yuan per ton, turned loss-making within a month. Major acetic acid plant maintenance in Central China and East China led to associated methanol supply being released to the market, supplementing some of the import feedstock shortfall in the Yangtze River region and Zhejiang. In northern Shandong, high crude oil prices have overburdened refineries, squeezing profits and—combined with weak downstream demand—driven MTBE operating rates to new lows. Currently, the domestic MTBE plant operating rate has fallen to 60.66%, with the decline particularly pronounced in Shandong, where the MTBE operating rate stands at only 52.88%, the lowest level so far this year.

It is worth noting that concentrated short-selling by inland players is often followed by covering shorts later. With intermediate traders holding limited inventories, covering shorts can easily trigger a rapid price rebound. The planned shutdown of olefin plants and the expectation of suspending domestic long-term contract offtake—the actual implementation and duration of such plans will still be determined by methanol prices and olefin margins.

Therefore, negative demand feedback and import supply issues will inevitably continue to play out. National methanol inventories will likely continue to decline, but downstream operating rates may have already bottomed out. The impact of olefin margins on operating rates will remain the key factor determining the methanol supply–demand balance. chempricehub forecasts that import supply constraints and still-existing export flows will keep coastal supply tight, thereby supporting a relatively strong trend for imported methanol prices. As tradable import cargoes reach a trough, if the Strait issue remains unresolved, negotiations and transactions for domestic export volumes are likely to increase. With downstream operating rates possibly hitting a floor, bearish operations may carry certain risks. Close attention should be paid to when industrial chain profits and restocking demand emerge, as they will influence market dynamics.