Shocked! Methanol skyrocketed by over 40%! Since the outbreak of the Middle East geopolitical conflict at the end of February, the domestic methanol market has shown clear event driven characteristics. From the perspective of import structure, China's methanol imports are highly dependent on a certain country in the Middle East. Data shows that by 2025, China's total methanol imports will reach 14.43 million tons, of which imports from that country account for as much as 65.76%.
Affected by the escalation of geopolitical conflicts, there are concentrated concerns in the market about the shipping capacity of major import source countries. The expectations for methanol loading and arrival at ports have significantly tightened, and spot prices have strengthened accordingly. The mainstream consumer market, represented by Taicang in Jiangsu, saw spot transaction prices soar to 2800-2900 yuan/ton at one point. The futures market has strengthened synchronously, with the methanol futures MA2605 contract opening high and closing high at 3217 yuan/ton yesterday. The cumulative increase since early March has exceeded 40%, and the linkage between futures and cash is significant.
At present, the methanol plant in the country has been fully shut down for maintenance, and it is expected that the actual amount of goods that can be shipped in April will significantly decrease. Considering the seasonal recovery channel of downstream demand in coastal areas, coupled with the continuous rise in import costs and the increasing bullish sentiment in the market, the short-term trend of coastal methanol prices may continue to be strong. It is expected that the spot price in April will mainly operate within the range of 2900-3300 yuan/ton.
Since March, the violent rise in methanol prices is profoundly reshaping the cost structure and market pattern of the silicone industry. The increase of over 1000 yuan/ton on the cost side has forced the entire industry's price system to shift upward, and leading manufacturers have taken the lead in setting off a wave of price increases. However, the downstream's willingness to accept high priced raw materials has significantly weakened, and the stocking strategy tends to be conservative. The market has entered a deep game period between strong cost support and weak demand acceptance.
Cost side shock: methanol skyrockets, reconstructing industry cost curve
Since March, the methanol market has experienced a historic trend. Due to the escalation of geopolitical conflicts in the Middle East and the obstruction of shipping in the Strait of Hormuz, domestic methanol import supply has sharply contracted. As of early March, the price of methanol in East China has risen to 2840-3000 yuan/ton, with a cumulative increase of over 700 yuan/ton.
This increase has had a direct impact on the silicone industry. According to information from industry institutions, producing 1 ton of DMC requires approximately 1.105 tons of methanol. Based on this unit consumption calculation, for every 100 yuan/ton increase in methanol prices, the production cost of DMC will increase by about 120 yuan/ton. Multiple individual factories have bluntly stated that "from March 1st to now, the cost of methanol has increased by about 1000 yuan." The sharp rise in costs is rapidly eroding the already meager profit margins of enterprises.
At the same time, the price of industrial silicon, another raw material, has also rebounded and stopped falling under market sentiment. The double pressure on the cost side has made the demand for individual enterprises to raise prices and transmit pressure unprecedentedly strong.