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Since the second half of the year, the domestic methanol market has continued to face downward pressure. As of November 20, the mainstream transaction price in the domestic market had dropped to around 2,000 yuan per ton (the same unit is used hereafter), with an average national price of 2,042 yuan – a decline of over 11% in half a year. “The ongoing weakness in the methanol market is primarily driven by factors related to an increase in supply and a decrease in demand. Additionally, the weakening of the international market has had an impact on the domestic market, contributing to further declines in prices. With the arrival of winter, driven by favorable factors such as support from upstream costs, a shift toward higher supply and lower demand, and continued declines in inventory levels, bearish sentiment in the market has begun to fade, and the market is expected to stabilize. ”said Shao Huiwen, a senior market commentator. Cost support: According to a relevant official from the Henan Petrochemical Association, in 2024 China’s methanol industry saw increases in both production and consumption. However, since the second half of 2025, a mismatch between supply and demand in the market has led to a continuous decline in prices. In terms of raw material structure, coal-based methanol production holds a dominant position in China, accounting for 78.3% of the total. Among this, facilities using advanced coal gasification technologies account for 72.5% of the total production capacity, demonstrating significant progress in technological upgrades. The capacity for producing methanol from waste gases such as coke oven gas accounts for 14.4%; as the coking industry undergoes transformation and upgrading, the growth of such projects is gradually stabilizing. Therefore, fluctuations in upstream costs directly affect the pricing of the methanol market. The decline in coal prices in 2024 reduced the cost pressures on coal-based methanol producers, whereas starting from winter 2025, steady coal prices along with rising natural gas prices imposed cost pressures on both coal-based and natural gas-based methanol production. Enhanced cost support provides a favorable foundation for the methanol market to stabilize after hitting new lows recently. Supply should decrease while demand should increase. Reports indicate that the methanol industry has seen steady growth in production capacity in recent years; by 2024, the annual production capacity of methanol exceeded 112 million tons. It is expected that an additional 5 million tons of production capacity will be added in 2025, representing a growth rate of over 4.4%. Given the weak condition of the downstream market for methanol, demand has not recovered as expected; under these circumstances, the continued decline in the methanol market reflects the laws of supply and demand in the market. However, a critical turning point occurred in late November. During the week of November 20, the total weekly supply of methanol in the domestic market was 2.303 million tons, while the total demand was 2.3779 million tons; thus, the supply and demand situation reversed compared to the previous week. In terms of supply, as the heating season in Iran begins in December, methanol imports are expected to drop by 50% on a significant scale. Coupled with rising natural gas prices that increase costs, domestic producers are inclined to reduce their production. From the perspective of downstream demand patterns, methanol-to-olefins, which accounts for the majority of demand, has seen some olefin producers reduce their own production and increase purchases from external sources due to cost factors, resulting in short-term growth. Methanol fuel, as the second-largest application area, has been driven by the onset of the heating season and shipping demands, becoming an important factor in shifting the supply-demand balance. In the traditional downstream sectors, the steady demand for formaldehyde, acetic acid, and methyl tert-butyl ether persists; among the emerging downstream areas, high-value products such as 1,4-butanediol and hydrogen produced from methanol have also become new drivers of demand growth. Declining inventory: Data from Longzhong Information shows that as of November 22, the inventory levels of methanol-producing companies in China were 358,700 tons, indicating a continued slight decline in inventory levels. Regionally, except for the southwest region where inventory levels rose due to weak demand, corporate inventory levels declined in most other areas. Among them, the inventory level in the Northwest region declined significantly, driven by external supply of olefins, active sales by inventory holders, and companies reducing prices to clear their stock. In other regions, corporate inventory also declined as a result of companies offering discounts on their products or reducing the load on their equipment. Officials from port-related companies said that this year the capacity utilization rate of overseas production facilities was high; Iranian facilities were operating at full capacity, and the degree of production cuts was less than expected. The import volume of methanol reached 1.65 million tons in October, and imports remained high in November, resulting in port inventories accumulating to historically high levels. This was another major factor contributing to the decline in methanol prices. However, affected by inventory replenishment on the mainland, port inventories of methanol began to decline significantly starting from the third week of November. Social inventory withdrawals in the East China region were strong, and overall demand from downstream users remained stable; port inventories in South China also showed a continued downward trend. Considering the current inventory situation, domestic manufacturers as well as ports with high inventory levels continue to reduce their stock levels, which is likely to have a positive impact on stabilizing market conditions in the future. However, some industry insiders warn that after late November, as the production facilities of domestic maintenance companies gradually resume operation, the overall capacity utilization is likely to increase, thereby enhancing the supply capacity. Additionally, with some olefin producers having completed their periodic stock replenishment, and the higher costs associated with winter transportation potentially being passed on to manufacturers, it is not ruled out that pressure on manufacturers’ export prices may continue. Therefore, the supply-demand struggle will continue in the short term, and the methanol market is likely to see narrow-range consolidation as it recovers.