Domestic Methanol Eases as BIS Rollback Sparks Supply Sentiment Shift

Key Highlights:

• Domestic prices down ₹0.25/kg; BIS order withdrawal triggers correction
• CFR China benchmark up $2/MT to $277/MT on rising trade activity
• Formaldehyde demand drops; pharma sector adopts wait-and-watch stance
• Rising port stocks may add pressure; buyers advised to avoid stockpiling

Domestic Prices Decline After BIS Order Withdrawal

• Domestic methanol prices declined by ₹0.25/kg today after the Ministry of Chemicals and Fertilizers (Government of India) announced the withdrawal of the 2019 Quality Control Order on Methanol by the Bureau of Indian Standards (BIS).
• Latest domestic offers (on 60-day credit terms):
  a. ₹23.50++/kg ex-Kandla
  b. ₹23.75++/kg ex-Mumbai
  c. ₹24.00++/kg ex-Hazira
  d. ₹27.00++/kg ex-Visakhapatnam
• Trader-level quotations remained slightly higher (on 60-day credit terms):
  a. ₹23.75++/kg ex-Kandla
  b. ₹24.00++/kg ex-Mumbai
• Meanwhile, Asian benchmark CFR China methanol prices increased by $2/MT to $277/MT, indicating firming sentiment in international markets.
• The downward correction in domestic prices is primarily driven by:
  1. Lower replacement costs, and
  2. Weak downstream demand

Supply & Demand: Steady Supply, Weak Downstream Demand in India

• Methanol supply in India remained steady through July 2025, but downstream demand showed mixed trends.
• Formaldehyde production dropped sharply during the month due to the monsoon season.
• Bulk drug manufacturers maintained a cautious stance, adopting a "wait-and-watch" approach amid cheaper cargo replacements and subdued production levels.
• Port inventories at Kandla and Hazira have built up, as liquidation slowed down due to weak downstream offtake.
• Interestingly, the Asian methanol market strengthened, with CFR China prices rising on the back of increased trading activity, according to a leading indenter.

India Methanol Market Overview

• Estimated Monthly Demand: 280,000 tonnes

Key Domestic Methanol Producers and Their Capacities:

Despite growing demand, domestic production remains limited, creating reliance on imports to bridge the supply gap.

Global Price Sentiment Turns Slightly Positive

• WTI Crude Oil: ↑ 1.00% to $65.90/barrel
• Natural Gas: ↑ 0.60% to $3.09/MMBtu

Market Outlook: Cautious Procurement Recommended

Despite current price stability, methanol may face downward pressure in the short term, primarily due to:

1. Weak demand from the formaldehyde and pharma intermediates sectors
2. The withdrawal of BIS certification may trigger a surge in methanol supply in the domestic market
3. Buyers are advised to adopt a cautious procurement approach, avoid aggressive inventory building, and wait for market signals to stabilize.