US Ban on Iranian Methanol Importers Fuels Global Price Spike, Lifts MDC on Feedstock Crunch

Key Highlights

• Domestic MDC up ₹4.50/kg WoW; feedstock methanol up ₹2/kg
• U.S. sanctions disrupt Iranian methanol supply (80% of India’s share)
• Western producers cut rates; southern plants at full capacity
• Prices likely to stay firm despite weak downstream demand

Domestic MDC Prices Surge on Feedstock Cost Pressure

• Domestic manufacturers have increased MDC prices by ₹1/kg to ₹34.50++ Ex-Dahej, ₹33.00++ Ex-Srikakulam, and ₹32.00++ Ex-Kurnool on 60-day credit terms.
• On a week-on-week basis, MDC prices have risen by ₹4.50/kg, driven by a sharp surge in feedstock methanol prices and reduced production rates.
• Bulk MDC deals were reportedly concluded in the range of ₹29–₹30 Ex-Plant for August & September 2025 contracts, on 90-day credit terms.
• Feedstock Methanol prices up 2rs/kg this week to 30++ Ex Kandla and Mumbai on 60 days credit terms.
• In the international market, Asian benchmark feedstock CFR China methanol spot prices have also firmed:
  A. 11 Aug 2025: $288/mt
  B. 7 Aug 2025: $288/mt
  C. 6 Aug 2025: $288/mt
  D. 4 Aug 2025: $281/mt
  E. 1 Aug 2025: $281/mt
• Feedstock methanol prices have jumped nearly 25%, following US sanctions on six Indian companies over purchases of Iranian-origin methanol.

Regional Production Trends: West Cuts Rates, South at Full Capacity

• Methanol supply in Asia has tightened after the US sanctions on Iranian methanol importers.
• Iran-origin methanol imports had reached an all-time high during May–June 2025, accounting for nearly 80% of India’s market share. Bulk buyers are now avoiding Iranian-origin cargoes, prompting a surge in bonded purchases in August 2025.
• The limited availability of non-Iranian cargo has led to a sharp spike in methanol prices. Downstream producers such as MDC and sodium methoxide manufacturers are facing higher conversion costs.
• MDC supply remains strong in the South, with Sreyas, TGV SRRAC, and Chemplast operating at full capacity. However, in the West, GFL, GACL, and Meghmani have reduced operating rates.
• Downstream consumption of MDC has dropped sharply, as pharma producers and R32 refrigerant manufacturers are running at reduced rates, leading to surplus stock availability.
• Importers, indenters, and bulk buyers continue to avoid Iranian-origin methanol due to sanction risks, and supply shortages are expected to persist for another three months, according to a market participant.
• India’s monthly MDC demand is about 30 kt, with domestic manufacturing capacities as follows:

Chemical Market News and Global Outlook

• WTI crude oil up 0.38% to $64.20/barrel
• Natural gas up 0.26% to $2.96/MMBtu
• Feedstock CFR China methanol at $288/mt
• FOB China acetic acid at $300/mt
• In China, Shandong Mingshui Dahua Co., Ltd., with a 600,000 tpa coal-to-methanol unit, has entered annual maintenance.

Expert Insights: Bullish Price Outlook Despite Demand Challenges

• Methanol & MDC prices are expected to remain bullish despite weak downstream demand, due to the ban on Iranian shipments and reluctance among end-users to trade in Iranian-origin cargo. The shift in supply dynamics is likely to drive greater price volatility in the coming weeks.
• Buyers are advised to build inventories as any recovery in pharma production could trigger sharp price spikes.