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The economics of green methanol depend heavily on carbon pricing and renewable electricity costs. If wind and solar power continue to fall below 0.15 yuan per kWh, electrolytic methanol becomes more competitive. But for now, the most practical near-term play is coupling 'waste electricity' from curtailed wind and solar with coal-to-methanol plants, which reduces carbon intensity without requiring a full switch to green hydrogen.
One nuance: the import channel complicates this picture. China imports about 1.44 million tons of methanol annually, with roughly 70% from the Gulf and Iran. Those cargoes are gas-based and priced independently of domestic coal economics. So even when coal-to-methanol margins are thin, coastal prices can diverge sharply from inland quotes, creating arbitrage windows for traders.
Traders should watch the Strait of Hormuz risk premium closely. Even a brief shipping disruption would spike coastal methanol prices in China, as inventory buffers are thin. But longer-term, Iranian supply growth caps the upside for domestic methanol prices, especially in eastern coastal regions where imported cargoes compete directly with inland coal-based product.