Methanol Prices Drop as Iranian Supply Resumes, Demand Remains Weak

 Key Highlights: 

1. Price Drop: Domestic methanol prices declined by ₹4/kg week-on-week due to weak downstream demand and increased Iranian supply.
2. Supply Constraints: Limited vessel arrivals in February-March tightened supply, but the resumption of Iranian production is expected to drive further price corrections.
3. Demand Trends: Bulk drug manufacturers reduced consumption, while formaldehyde demand remained stable; MTBE and Acetic Acid segments continued to struggle.
4. Market Outlook: Rising crude oil and natural gas prices may impact costs, but increased methanol supply from Iran could keep prices volatile in the near term.

Chemical Price: Methanol Prices Expected to Remain Volatile

• Methanol importers have lowered prices by ₹1/kg, quoting on 60-day credit terms:
  1. ₹34.00++/kg Ex-Kandla
  2. ₹34.50++/kg Ex-Mumbai
  3. ₹34.25++/kg Ex-Hazira
  4. ₹35.00++/kg Ex-Visakhapatnam
• Meanwhile, trader offers remained varied on advance payment terms:
  1. ₹34.00++/kg Ex-Kandla
  2. ₹34.25 to ₹35.00++/kg Ex-Mumbai
• Domestic methanol prices have declined by nearly ₹4/kg week-on-week, driven by weak downstream demand and the resumption of production by Iranian manufacturers.
• The Asian benchmark CFR China future contracts have shown an upward trend:
  A. 1st Half March 2025: $302/ton
  B. 2nd Half March 2025: $302/ton
  C. 1st Half April 2025: $300/ton
  D. 2nd Half April 2025: $300/ton

Supply & Demand: Weak Downstream Demand May Limit Price Recovery

• Due to limited vessel arrivals, the methanol supply remained constrained from February 2025 to the first half of March 2025. Despite adequate port inventories, importers attempted price hikes, but buyers strongly resisted.
• On the demand side, key consumer segments exhibited mixed trends:
• Bulk drug manufacturers significantly reduced production in February, leading to a sharp decline in methanol consumption.
• Formaldehyde producers maintained steady demand on a week-on-week basis, supported by seasonal trends.
• Amines, MTBE, and Acetic Acid producers continued to face weak demand due to unfavorable downstream conditions.
• With Iranian methanol manufacturers resuming operations, domestic producers anticipate a significant price correction in the near term.
• India's total methanol demand is estimated at 280 kt per month.
• Domestic Methanol Production Capacities:
  A. GNFC: 22.39 kt/month
  B. Deepak Fertilizers: 7.26 kt/month
  C. Vinati Organics: 135 kt/month
  D. RCF: 7.36 kt/month

Chemical Market News: Global Trends

• In the international market, upstream energy prices exhibited upward momentum:
  A. WTI Crude Oil: Up 1.07% to $67.90/barrel
  B. Natural Gas: Up 1.32% to $4.15/MMBtu

Expert Opinion: Avoid Excess Inventory Buildup

Methanol prices are expected to remain mixed in the near term, influenced by weak downstream demand and a surge in supply as  Iran shipments resume. Buyers are advised to remain cautious while making inventory decisions.