Guotai Junan Futures: Methanol leads the rally, but watch out for these potential risks!

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Guotai Junan Futures Market Analyst　　Chen Junhao　　Investment Consulting License No.: Z0021546

Today, methanol leads the market, closing up over 4% this afternoon, with the main methanol contract closing above 3200 yuan/ton, and an increase of nearly 80,000 contracts during the day. Iran, as the world’s second-largest producer and the largest exporter of methanol, has seen significant contraction expectations for its methanol production and exports due to geopolitical conflicts. The recent trend in methanol prices has been strong, so what are the current drivers? What potential risks should we pay attention to in the future?

Main Drivers:

1. Geopolitical uncertainty remains the main variable. According to a statement from Iranian military sources cited by CCTV News, Iran is continuously monitoring enemy movements and has warned that if the enemy takes action on Iranian territory or at sea that increases its defense costs, Iran will open up other fronts, including the Strait of Hormuz, in response, emphasizing that “Iran is fully prepared for further escalation.” At the same time, Iran’s hardline diplomatic stance has further heightened market concerns. Regarding the previously reported so-called ceasefire proposal, Iranian officials view it as “a list of fantasies” and reaffirm that “a ceasefire and negotiations are not feasible at this stage.” Currently, many facilities in the Middle East are halted, capacity utilization is rapidly declining, and expectations for a decrease in Iranian imports are gradually increasing, leading to a rise in geopolitical valuation premiums.

Source: Steel Union, Guotai Junan Futures Research Institute

2. A turning point in port inventory has emerged. According to Longzhong Information, as of March 25, 2026, the total methanol port inventory in China is 1.1555 million tons, a decrease of 106,200 tons from the previous period. Under the pressure of domestic production and absolute high prices, imports continue to weaken, making short-term recovery of imports quite challenging.

3. Price transmission is relatively smooth. Currently, the valuation of methanol is still influenced by geopolitical factors, with negative feedback trading sentiment for MTO significantly weakening, while olefin prices are on an upward trend, so in the short term, the transmission of high prices to downstream is relatively smooth.

Risk Warnings:

1. High volatility due to changes in market sentiment. Previously, the U.S. side continuously released expectations of conflict de-escalation, leading to significant price fluctuations in energy chemical varieties in the short term, which belong to short-term emotional fluctuations. However, if there are expectations of resumption of production in Iranian facilities in the future, it may lead to new drivers on the supply-demand side. Investors should continuously monitor geopolitical developments and statements from both sides.

2. Domestic supply remains relatively stable. In March, methanol production transitioned from maintenance in the first half of the month to a concentrated restart in the latter half, maintaining overall supply stability. The subsequent maintenance plans for April are limited, coupled with currently favorable profit margins, domestic supply is expected to have further upward space.

Currently, energy chemical varieties still maintain a high volatility state. From the market perspective, the price of the main methanol contract is in a high-level wide fluctuation pattern, and attention can be paid to the support around the 3000 yuan level. Caution is advised for unilateral positions, and operational risks should be noted.

Source: Steel Union, Longzhong Information, Guotai Junan Futures Research Institute

Completion Time: March 26, 2026 16:00

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Editor: Li Tiemin