The year 2025 presented a complex narrative for China's methanol market, characterized by a distinct three-phase cycle of "initial strength, subsequent weakness, and prolonged volatility." This trajectory was orchestrated by the dual forces of expanding domestic supply and demand, punctuated by significant macroeconomic and geopolitical interventions. The annual average price settled at RMB 2,123.72 per ton, a slight decrease of 2.35% year-on-year. The market witnessed a wide price swing, with the peak in March (RMB 2,307.94/ton) and a near five-year low touched in November (RMB 1,966.12/ton).

Deconstructing 2025: Four Pivotal Phases

1. Q1: From Stagnation to Strength. Post-Lunar New Year, demand gradually revived. Enquiries and purchases by Methanol-to-Olefins (MTO) plants in Northwest and East China, coupled with the restart of traditional downstream units, fueled restocking. Concurrently, concentrated spring maintenance in major production regions tightened supply. This demand-supply synergy propelled prices to a Q1 peak.

2. Q2: The Sharp Downturn. Early April saw a sharp macroeconomic pivot affecting global commodity markets, triggering a bearish sentiment shift for methanol. Fundamentally, strong producer margins led to lighter-than-usual seasonal maintenance, keeping domestic operating rates high. Rising import volumes further loosened supply. Downstream users, facing cost pressure, resisted high prices, creating a clear "strong supply, weak demand" dynamic that drove prices sharply lower.

3. Mid-Year: A Counter-Seasonal Rally. Defying traditional summer demand seasonality, prices firmed from June to August. Geopolitical tensions buoyed energy prices, and supportive domestic macro policies lifted futures. Concentrated plant turnarounds in inland regions and consistent methanol procurement by local MTO units kept producer inventories low, fostering a firm pricing attitude. However, persistently high import volumes led to rapid inventory build-up at key ports, capping the upside for inland prices and creating a regionally divergent, consolidating market.

4. Year-End: Plunge and Partial Recovery. From late October, high port inventories and reduced operating rates at coastal MTO plants combined to push futures and spot prices into a downward spiral, breaching the psychologically significant RMB 2,000/ton level in November. Expectations of winter gas curtailments in major overseas production regions later provided a floor and triggered a technical rebound. However, weak seasonal domestic demand and logistical challenges from winter weather limited the recovery momentum, leading to a low-level consolidation.

Core Market Dynamics: Supply, Demand, and Trade Flows

• Supply: Moderate Capacity Growth, Sustained High Operating Rates. New methanol capacity in 2025 was primarily added in coal-rich regions like Inner Mongolia and Xinjiang, with total capacity growing approximately 6.47%. Favorable coal-to-methanol margins incentivized high production, lifting the annual average operating rate to 78.92%, significantly above the previous year's level, ensuring ample domestic supply.

• Demand: A Story of Divergence. Methanol-to-Olefins (MTO) demand remained the cornerstone. With meaningful new capacity additions, the sector's average operating rate stayed above 80%, providing stable consumption. However, procurement was highly profit-sensitive, leading to fluctuating demand intensity. Traditional downstream sectors (e.g., formaldehyde, acetic acid) exhibited continued weakness, constrained by soft end-markets like construction and thin margins. Procurement was strictly need-based, with the typical "Golden September, Silver October" seasonal boost notably absent.

• International Trade: Record-High Imports Remain Dominant. China's methanol imports for Jan-Nov 2025 reached approximately 12.7 million tons, marking another annual increase. Import volumes fluctuated sharply due to overseas plant operations, geopolitics, and trade policies, directly impacting port inventory levels and coastal market prices. Exports, while growing year-on-year, remained negligible in volume relative to imports and domestic production.

• Port Inventories: The Barometer of Market Balance. Port stocks experienced dramatic swings from a low of ~550k tons (April) to a high near 1.5 million tons (October). These fluctuations were a real-time reflection of the interplay between import arrivals, inflows from inland China, demand from coastal MTO plants, and inter-regional arbitrage activities, making it a critical price-setting mechanism for the East China market.

2026 Outlook: Toward a Tighter Balance and Higher Price Range

Looking ahead to 2026, the methanol market is poised for a potential shift toward a tighter supply-demand balance, supporting a higher price floor.

• Cost Foundation: Coal prices are expected to fluctuate seasonally, providing a variable cost base.

• Supply Evolution: Domestic capacity expansion is forecast to slow further under China's "Dual Carbon" policy framework. Most new projects are integrated with downstream units, limiting net new commodity methanol supply.

• Demand Drivers: MTO demand is projected for steady growth. Critically, the emerging demand for green methanol as a marine fuel presents a transformative long-term bullish factor, aligning with the global shipping industry's decarbonization drive. Traditional downstream growth is likely to remain muted.

• The Import Wildcard: Production stability in key exporting countries, geopolitical developments, and international trade policies will continue to be the primary source of uncertainty for import volumes.

• Price Forecast: Synthesizing these factors, the overall supply-demand dynamic is expected to improve. Therefore, the average price for methanol in 2026 is forecast to range between RMB 2,050 and RMB 2,450 per ton, suggesting a potential upward shift in the market's price center.

Wuxi High Mountain Hi-tech Development Co.,Ltd. remains at the forefront of chemical market intelligence. We provide our global partners with deep insights into the methanol value chain and reliable supply chain solutions, empowering them to make informed decisions and capitalize on opportunities in an evolving market landscape.