Methanol prices hit a nearly three-year high, passing costs onto the agrochemical industry chain.

Reprinted from: China Business Network

By Jingji Reporter Chen Jiayun, Beijing

Affected by the Middle East situation and large-scale overseas plant shutdowns, since March the price of methanol—an essential basic chemical raw material for the chemical industry—has continued to rise.

According to data from Jinlianchuang, as of March 26, the methanol price in the Southwest market was 2820 yuan–3070 yuan/ton. Compared with the end of February, it increased by 825 yuan/ton, a rise of 38.9%, reaching the highest level in nearly three years.

Jinlianchuang analyst Cui Cheng, in an interview with a reporter from China Business News, said that since March, methanol market prices in the Southwest region have continued to climb. With the Middle East situation tense and shipping through the Strait of Hormuz disrupted, the chemical sector has moved higher overall. At the same time, the Iranian South Pars natural gas field was attacked, and local methanol plants once again fully shut down. Methanol futures prices surged significantly, and market sentiment was clearly boosted.

Methanol prices jump sharply

Since March, the domestic methanol market in China has shown a pattern of coordinated gains in both futures and spot markets. According to Wind data, as of March 31, methanol 2605 futures—before the Middle East situation escalated on February 27—rose from 2179 yuan/ton to 3229 yuan/ton by the end of March, with a total increase of 48.19% over the period.

Cui Cheng said that in March, the domestic methanol market saw a one-sided, large rise driven by multiple factors. By the end of March, both mainland and port methanol prices had simultaneously set the highest levels in nearly three years. Due to the impact of geopolitical conflict, the attack on Iranian gas fields led to plant shutdowns. In addition, with shipping through the Strait of Hormuz disrupted, supply of China’s main methanol import sources tightened and import costs increased, directly driving futures prices to break upward. This, in turn, pushed up methanol prices at ports in East China and South China.

Caiyu Futures said that the current logic dominating the methanol market is still geopolitical conflict. On the one hand, the ongoing China-Iran war between the U.S. and Iran has been further fueling sentiment premiums; on the other hand, the conflict has led to expectations of reduced China methanol imports. Iran, as the world’s second-largest methanol producer and largest methanol exporter, has a significant impact on global methanol supply. Its plants shutting down fully caused March methanol import volumes to shrink markedly, further intensifying the supply-demand contradiction in the domestic market.

For the outlook, Jinlianchuang believes that geopolitical conflict remains the core variable affecting domestic methanol prices. “If the U.S.-Iran war continues, higher crude oil prices will drive a rebound in energy-and-chemical products, and combined with reduced imports, methanol prices are expected to keep rising. If geopolitical conflict eases, Iranian cargoes may return to the market, and combined with high domestic supply, prices may see a phase of pullback. But since the fundamental contradictions are not prominent, the pullback would be limited. It is necessary to keep watching developments in the U.S.-Iran war and changes in futures and spot market prices.”

Zhuochuang Information analyst Zhang Hongda offered a judgment based on supply-demand fundamentals. He said that in April, although some production enterprises may have “spring inspection” expectations, higher industry profits will likely support producers in maintaining high operating rates overall, so market supply will remain at a high level. On the demand side, as profits in some downstream industries recover, market demand is expected to remain stable. With arbitrage windows between the inland and coastal markets possibly continuing to open, fundamentals are likely to stay stable. Also, market demand may be slightly higher than supply, and inventories in some production regions may still be expected to decline. The focus of subsequent transactions will likely remain high-level consolidation.

Push up agricultural chemical costs

Methanol is a core raw material used for chemical intermediates such as formaldehyde and acetic acid. These intermediates are widely used in the production of mainstream agrochemical products such as glyphosate.

It is worth noting that in addition to methanol, prices of other upstream raw materials—including coal, yellow phosphorus, and liquid chlorine—have also risen in parallel in recent days, creating a resonance effect with methanol price increases and further raising the comprehensive production costs of pesticide companies.

As glyphosate is the herbicide with the largest global usage volume, accounting for about 30% of the global herbicide market, its price trend reflects cost pressures across the industry chain. According to Zhuochuang Information monitoring, as of March 30 the average market price of glyphosate reached 29,750 yuan/ton, up 23.44% from the beginning of March.

Zhuochuang Information analysts said that the core logic behind the continued rise in glyphosate prices recently lies in dual support: tight market supply and raw material prices running at high levels. Under the combined effect of cost pressure and demand recovery, trading sentiment remains favorable. The market mindset of “buying up but not buying down” has driven prices to keep probing higher, and companies’ quotes have also become more cautious. The analyst expects that in the near term, supported by low inventories, the glyphosate market will continue its trend of testing for price increases, and prices may rise further.

The concentrated release of spring plowing demand further magnified the price-increase effect. Currently, in Northern China, spring sowing and in Southern China, seedling raising are entering key stages. Downstream agricultural input enterprises have boosted their inventory purchasing enthusiasm. The resulting supply-demand mismatch has intensified upward pressure on prices.

Multiple agricultural chemical companies told reporters that since March, upstream raw material prices such as yellow phosphorus and methanol have continued to rise sharply. As procurement costs keep moving up, it has become a consensus in the industry that passive price adjustments have been adopted.

On March 19, Xingfa Group (600141.SH) disclosed on an interactive platform that recently the glyphosate market has entered a peak consumption season; the prices of its technical active ingredient products have gradually increased, and the company’s related product series are overall in a situation of strong production and sales. On March 27, Jiangshan Co., Ltd. (600389.SH) also responded on an interactive platform that, influenced by international geopolitical conflicts and fluctuations in prices of raw materials such as petroleum, recently glyphosate product prices have increased to some extent, and the company will dynamically adjust its product quotes based on market conditions going forward.

Editor: Dong Shuguang | Reviewed by: Wu Kezhong | Proofread by: Liu Jun

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