Lead: This week, spot and futures prices of methanol in the coastal region simultaneously plummeted by 500 CNY/ton. The primary logic behind this decline is based on the anticipated signing and implementation of a US-Iran Memorandum of Understanding. Brent crude oil has fallen below the $80/barrel mark, and all energy-chemical commodities have experienced significant retracement. As some Iranian floating storage vessels braved the Strait, the basis of methanol paper cargo in Taicang weakened sharply. Although the near-month premium pattern persists, the inter-month spreads on the futures curve have clearly weakened, with reverse carry positions performing notably.

Although market rumors are rife, as of the time of writing, our network has tracked and confirmed that a total of three vessels (115,000 tonnes) have successfully passed through the Strait this week. There may still be a few vessels attempting to exit, while numerous cargoes within the bay remain at anchor waiting for legal clearance notifications. With the restart of several plants in the earlier period, inventories at major Middle Eastern producers are now high. According to information received today, several units have been shut down again due to tank-top conditions. Floating storage and inventories will eventually be released or loaded out, but the pace and rhythm of the departures still require close monitoring. Before the agreement is signed, factory tenders are mainly FOB offers, and the restoration of shipping capacity will also take some time.

According to the latest data, the expected discharge volume from methanol imports in June is 411,000 tonnes. The July import forecast shows a recovery, but the overall volume is still unlikely to return to high levels. In July, two large-scale units on the Inner Mongolia Northern Route are scheduled for maintenance, which will require close attention to their impact on domestic prices. The sharp decline in methanol prices this week quickly restored some olefin profit margins, and combined with the recovery in import expectations, supported the smooth restart of two MTO units in Jiangsu and Zhejiang this week. Although the current operating rates have not yet returned to high levels, no further maintenance plans have been officially announced as of yet.

Entering the third quarter, the expected recovery of imports following the potential end of hostilities may renew attention on some previously shelved large-scale downstream plants in South China. We do not deny that the current traditional demand sector is in a slack season, further dragging down prices. However, this week's sharp drop in methanol prices has significantly improved downstream profit margins along the industrial chain. If the profit recovery persists, it cannot be ruled out that after market sentiment fully plays out, a certain amount of off-season restocking demand may emerge. In summary, chempricehub believes that methanol as a futures contract may have already priced in the decline prematurely. Going forward, close attention should be paid to the performance of downstream product prices, while the speed at which Middle Eastern vessels transit the Strait will influence certain arbitrage positions. Under the logic of futures-spot convergence, the basis for paper cargo referencing the 09 contract may still have room to weaken further.