Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - The current rally in the domestic methanol market is driven by geopolitical sentiment rather than fundamental supply - demand improvements. In the short - term, geopolitical conflicts may continue to disrupt the market, but in the long - term, the supply - demand pattern will remain loose, and methanol prices are likely to show a weak and volatile trend. Investors are advised to be rational, avoid chasing high prices, and focus on factors such as the resumption of Iranian production, port inventory reduction, MTO device operation, and the situation of the US - Iran conflict [6][43]. Summary by Relevant Catalogs Introduction: Middle East Geopolitical Conflict and the Closure of the Strait of Hormuz - In late February 2026, due to the sharp escalation of the US - Iran military confrontation, Iran closed the Strait of Hormuz. The strait accounts for 35% of the global methanol seaborne trade volume. The closure not only halted Iranian methanol exports but also affected the export channels of other Middle Eastern countries. The market's expectation of a significant reduction in domestic methanol imports in the next 1 - 2 months has been strengthened [10]. 1. Geopolitical Sentiment Dominates, and Methanol Deviates from Fundamental Support - Affected by geopolitical risks, the domestic methanol market has seen a strong upward trend this week, with both futures and spot prices rising. However, the current domestic methanol supply is sufficient, demand is weak, and the external dependence is low. The short - term price increase is mainly due to geopolitical sentiment, and investors should not blindly chase high prices [11]. 2. China's Methanol Production Capacity is Large, and the Supply - side is Highly Controllable - By the end of 2025, China's total methanol production capacity reached 11,629 million tons, accounting for over 60% of the global total. In 2025, the domestic methanol output was 9,233.55 million tons. In 2026, the new production capacity is about 3.7 million tons. Coal - based methanol accounts for 76.3% of the total capacity. As of late February 2026, the overall domestic methanol device operating rate reached 92.8%, and the weekly output reached 2.0731 million tons [16]. 3. Low External Dependence, and Imports Have Limited Impact on the Domestic Market - China's methanol consumption is mainly self - sufficient, with an external dependence of 13% - 15%. In 2025, the net import volume accounted for only 13.4% of the apparent consumption, and the domestic production rate was 86.6%. Even if the import volume increases slightly in 2026, it is expected to account for less than 15% of the total domestic supply. Imports mainly affect coastal ports and have little impact on the inland market [19][21]. 4. The Impact of the US - Iran Conflict is Limited, and the Strait Closure is Unlikely to Change the Domestic Supply Pattern - Even if Iranian methanol exports are completely interrupted, the domestic monthly production can fill the import gap. Iran's methanol can be replaced by other sources, and the impact of the Strait of Hormuz closure is controllable. The current low operating rate of Iranian devices due to gas restrictions has already digested part of the impact [24][25]. 5. Diversified Import Channels and Enhanced Supply Chain Resilience - China's methanol imports have a diversified pattern, with the Middle East as the main source and multiple supplementary sources. In 2025, the Middle East accounted for 69.9% of imports, Southeast Asia about 15%, and other regions about 15%. Non - Iranian imports are expected to increase by 15% - 20% in 2026 [26]. 6. Sufficient Domestic Spot Supply, and High Inventories in East and South China Ports Suppress Prices - The domestic methanol spot market has abundant supply, and port inventories are at a historically high level. As of the end of February 2026, the port sample inventory was 1.4467 million tons. High inventories make it difficult for prices to rise [27]. 7. Overall Weak Downstream Demand, and the Core Downstream Olefins Drags the Market - The downstream demand for methanol shows a pattern of weak core downstream and differentiated traditional downstream. The MTO device, which accounts for about 50% of methanol consumption, is in a state of continuous loss. The average operating rate of MTO devices is about 84.08%, but the profit of external - purchased methanol MTO devices in East China is deeply negative. Traditional downstream industries such as formaldehyde and dimethyl ether have low demand, while acetic acid and MTBE have relatively stable operating rates but low consumption proportions [30]. 9. Conclusion - The domestic methanol market has sufficient production capacity, high self - sufficiency, diversified import channels, high port inventories, and weak downstream demand. The current price increase is due to geopolitical sentiment, lacking fundamental support. In the long - term, the supply - demand pattern will remain loose, and prices are likely to be weak and volatile [43].

Core Viewpoint - The domestic coal-to-methanol production profits have been substantial in 2025, leading to a continuous release of methanol capacity despite the annual maintenance period, resulting in high production levels and weak futures prices for methanol [1][2][5]. Group 1: Production and Profitability - Since January 2025, the production profits for coal-to-methanol in China have remained robust, with cost-profit margins generally between 3% and 9%, encouraging companies to increase production capacity [2]. - By the end of March 2025, the cost-profit margins for coal-to-methanol in various regions were reported as follows: Northwest at approximately 6.5%, Shandong at around 10%, and Inner Mongolia at about 13.8%, indicating a slight month-on-month increase [2]. - The production capacity for coal-to-methanol is expected to continue to be released, maintaining supply pressure due to high profit margins [2][4]. Group 2: Seasonal Maintenance and Production Levels - In March 2025, the annual spring maintenance peak for methanol production was observed, with production load decreasing slightly but remaining at high levels, with a weekly average operating rate of 75.64% [3]. - The weekly methanol production averaged 1.8269 million tons, showing a year-on-year increase of over 110,000 tons despite a slight month-on-month decrease [3]. - Domestic methanol inventory decreased to 327,800 tons by March 27, 2025, reflecting a significant reduction compared to previous months and last year [3]. Group 3: Downstream Demand - In March 2025, there were minor improvements in downstream demand for methanol, but the extent of improvement was less than in previous years, with formal demand sectors showing mixed results [5]. - The operating rate for formaldehyde enterprises was 25.73%, while acetic acid saw a significant increase to 93.05% due to favorable profit margins [5]. - Overall, the downstream demand for methanol remains weak, with most sectors experiencing low operating rates, leading to limited improvements in consumption [5].