China's Methanol Prices Spike as Iran's Hormuz Disruption Threatens Key Imports

Geopolitical tensions have flared as Iran's threat to close the Strait of Hormuz triggered a supply shock in the global methanol market.

This directly impacts China, which relies on the Middle East for nearly 70% of its methanol imports, most of which pass through this critical chokepoint.

In response, Chinese methanol futures prices hit their daily limit and spot prices surged, reflecting immediate fears of a severe supply shortage.

A sudden spike in China's methanol prices has sent ripples through the global chemical market, directly triggered by escalating geopolitical tensions in the Middle East.

The immediate catalyst was Iran's threat on March 2 to close the Strait of Hormuz, a critical artery for global energy and chemical shipments. The market's reaction was swift and decisive. China's main methanol futures contract surged by its daily limit of 8%, while spot prices in East China jumped nearly 10% within a few days. This price shock reflects a sudden re-evaluation of supply risk in a market highly dependent on stable maritime trade.

So, why was China's market hit so hard? The answer lies in its significant import dependency. First, China imports roughly 14.4 million tons of methanol annually. Second, a staggering 70% of these imports, amounting to about 10 million tons, originate from the Middle East. Third, nearly all of this volume must navigate the Strait of Hormuz. This structural vulnerability means any disruption at this single chokepoint has an outsized impact on China's domestic supply chain, affecting downstream industries like plastics (via Methanol-to-Olefins) and other chemical production.

This event didn't happen in a vacuum, though. The market was already on edge. In the preceding months, rising feedstock costs and existing difficulties with Iranian imports had already created a sense of tightness. Furthermore, U.S. sanctions had been steadily increasing logistical friction for Iranian exports. While China had high methanol inventories in late 2025, this buffer could be depleted quickly once the import tap was turned off, transforming the high stock levels from a sign of security into a measure of vulnerability.

Ultimately, the scale of the disruption is global. The CEO of Methanex, a major producer, estimated that 18-20 million tons of annual Middle East methanol exports were shut-in. This quantifies the massive supply gap that markets worldwide, not just in China, began to price in. The Hormuz incident served as a stark reminder of how quickly geopolitical events can upend commodity markets, especially for countries with concentrated import sources.

Methanol-to-Olefins (MTO): A chemical process that converts methanol (often from coal or natural gas) into olefins like ethylene and propylene, which are building blocks for plastics.
Spot Price: The current market price for immediate delivery of a commodity or asset. It contrasts with a futures price, which is for delivery at a later date.

China's Methanol Prices Spike as Iran's Hormuz Disruption Threatens Key Imports

Geopolitical tensions have flared as Iran's threat to close the Strait of Hormuz triggered a supply shock in the global methanol market.

This directly impacts China, which relies on the Middle East for nearly 70% of its methanol imports, most of which pass through this critical chokepoint.

In response, Chinese methanol futures prices hit their daily limit and spot prices surged, reflecting immediate fears of a severe supply shortage.

A sudden spike in China's methanol prices has sent ripples through the global chemical market, directly triggered by escalating geopolitical tensions in the Middle East.

Methanol-to-Olefins (MTO): A chemical process that converts methanol (often from coal or natural gas) into olefins like ethylene and propylene, which are building blocks for plastics.
Spot Price: The current market price for immediate delivery of a commodity or asset. It contrasts with a futures price, which is for delivery at a later date.