CITIC Futures: U.S.-Israel Surprise Attack on Iran Continues to Impact, Geopolitical Drivers Push Methanol Higher

From a geopolitical disturbance perspective, the sudden change in Iran’s situation has a significant impact on China’s methanol market. As the world’s second-largest methanol producer, Iran’s methanol capacity is 17.16 million tons, accounting for approximately 9.2% of global capacity. Its methanol facilities are highly concentrated along the Persian Gulf, making it China’s most critical import source for methanol. By 2025, China’s methanol imports from Iran are expected to exceed 7.92 million tons, accounting for over 55% of total imports and about 7% of domestic apparent consumption. After the U.S. and Israel launched military strikes, the Iranian Islamic Revolutionary Guard Corps announced on March 1 local time that the Strait of Hormuz had been closed, directly blocking methanol shipping routes, and the restart of facilities is likely to be disrupted. As a result, the domestic methanol market’s short-term focus has shifted back to geopolitical factors.

From the overseas market perspective, the primary raw material for overseas methanol production, LNG, is significantly affected by the closure of the Strait of Hormuz. LNG exports from Qatar and the UAE in the Middle East must pass through the Strait, and the current logistical slowdown has pushed up gas prices in Europe and Asia, thereby increasing international methanol prices. If the closure of the Strait of Hormuz persists long-term, it will further stimulate rising gas prices across Eurasia.

Regarding domestic fundamentals, coastal methanol port inventories remain high, with the week of February 27th seeing port stocks at 1.4467 million tons, up 35% year-on-year. However, if the Strait of Hormuz remains closed long-term, the lack of imports may lead to a short-term reduction in port inventories. If the gap continues to widen, supply disruptions could impact the operation of coastal MTO (Methanol to Olefins) facilities, and inland enterprises may become the main alternative suppliers.

The domestic market is also rising in tandem with the coastal regions, especially with futures hitting the daily limit-up in the afternoon. Traders holding stocks are mostly maintaining their prices, with some enterprises bidding at premiums, resulting in noticeable premium transactions.

From market sentiment, the sudden change in Iran’s situation has driven a collective rally across energy and chemical sectors, with market sentiment leaning toward bullishness. (CITIC Futures)