The gas restriction policy has provided short-term support for methanol prices, but it hasn’t managed to reverse the overall supply-demand imbalance. As a result, the recent price rebound faces significant challenges. While the off-season slowdown in methanol trading is evident, there are still opportunities for investors who focus on major capital trends and track market movements closely.
The impact of the gas restriction policy has weakened, and supply remains ample. The spot price of methanol has been supported by these policies, with small-scale traders pushing prices up to 2,800 yuan per ton. However, the large inventory levels in the market indicate that supply is more than sufficient. Sales have been sluggish, prompting manufacturers and traders to offer more aggressive price promotions. By December 21, Jiangsu’s stockpile reached 499,800 tons—up 74,800 tons from the start of the month, or 17.8%—rising for three consecutive weeks and nearing the annual high. Although some natural gas-based methanol plants in Shaanxi, Inner Mongolia, Lanzhou, and Qinghai reduced output due to gas restrictions, the average daily production loss was about 1,500 tons. However, other facilities remained operational at over 60% capacity, quickly closing the supply gap. With coastal inventories rising, the policy’s supportive effect has weakened, putting more pressure on methanol prices.
Traditional downstream demand is weak, and new downstream products haven't helped boost methanol prices. Prices for dimethyl ether, acetic acid, and other traditional methanol derivatives have dropped compared to the end of last month. Major markets in eastern China saw declines of 50–100 yuan per ton. This downward trend in downstream product prices has created additional pressure, limiting methanol demand and hindering price increases, leading to a negative cycle that continues today. Meanwhile, new methanol-to-olefins (MTO) projects in China are still under construction or in trial production and haven’t yet contributed meaningfully to demand. According to the 46th Annual European Petrochemical Association (EPCA) meeting, global methanol demand is expected to grow at an average of 10.5% annually over the next five years, reaching over 50 million tons per year. Most of this new demand will come from MTO plants in Asia.
With the off-season approaching and the "Golden 9 Silver 10" sales period ending, transaction volumes have started to decline. However, major capital flows remain active. Data from the Zhengzhou Commodity Exchange shows that the top 20 members account for over 54% of daily turnover, with their average share exceeding 68%. These key players’ activities closely align with market trends, offering investors a useful indicator even during low-volume periods.
In conclusion, the continuous rise in coastal inventories not only fills the gaps caused by gas restrictions but also brings stockpiles back to historical highs. However, traditional downstream demand has not improved, and emerging sectors have yet to take on significant responsibility. Overall, the oversupply situation in the methanol market persists, and downward pressure on prices remains strong.
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