# Methanol: Cycles

Energy shocks, coal rationing and the olefin ceiling

Source page: https://www.materialinsights.org/chemicals/methanol/cycles/

What this tab covers How its prices and margins move: past booms and busts with price levels, the spread or margin that the industry watches, the drivers of the cycle and the metrics to track.

Methanol prices follow energy prices with leverage. The floor is the cash cost of the marginal gas-based producer, usually in Europe or China; the ceiling is what Chinese MTO plants can pay before they shut, roughly a third of the olefin price. Spikes come when gas or coal jumps (Europe 2022, China 2021) or when Gulf and Iranian exports are cut (sanctions in 2025, the Hormuz disruption in 2026). Demand is steadier than prices: merchant demand grew only 0.9% a year in 2020-2024 (Argus). New US and Iranian capacity tends to arrive in blocks and drag prices back down.
 The spread to watch **Methanol minus gas cost; and MTO margin (olefins minus about 3 t methanol)**

Gas-based margin = methanol price minus about 28.5 MMBtu x gas price. At December 2025 CFR India of $309/t and Henry Hub of about $3.5, a US Gulf producer's gas cost was about $100/t (indicative). The MTO margin is the polyolefin or olefin price minus 3 t of methanol; when negative, non-integrated Chinese MTO units idle and cap methanol prices (Argus, Energy Aspects).

#### Booms and busts

1. 2021

China's coal shortage and power rationing cut coal-based methanol output and raised costs; prices then fell when Beijing capped coal prices.

Zhengzhou methanol futures rose above 4,000 yuan/t in October 2021 (indicative, ZCE data from memory)

2. 2022

European gas prices made local methanol plants uneconomic; many idled and Europe imported more from the US and Middle East.

Gas cost alone about $1,150/t of methanol at the 2022 average European gas price of $40.3/MMBtu (World Bank; derived at 28.5 MMBtu/t, indicative)

3. 2025

US sanctions on Iranian exports pushed India to Oman, Saudi Arabia, Qatar and Bahrain; Iranian cargoes went to China, widening the India-China spread.

CFR India $309/t and CFR China $246.5/t in December 2025, a $63/t spread (S&P Global)

4. 2026

US-Israeli strikes on Iran from 28 February all but closed the Strait of Hormuz; Qatar and SABIC declared force majeure on methanol in March (S&P Global; ChemOrbis), and over 4.5 Mt of production was estimated to be affected by end-May (Crisil, Jul 2026).

CFR India averaged $569/t in April-June 2026, up 114% y/y; Indian domestic price reached Rs 73,950/t in May 2026, up 182% (Crisil)

#### What drives the cycle

- **Gas and coal prices.** Energy is most of the cost; European TTF and Chinese thermal coal set the marginal producer's floor.
- **Chinese MTO operating rates.** MTO is the swing demand; at negative margins non-integrated units idle within weeks.
- **Gulf and Iranian exports.** The Middle East is about 28% of exports and Hormuz carries about a third of seaborne trade (Crisil).
- **Oil prices.** Crude sets the value of MTBE and fuel blending, and of naphtha-based olefins that compete with MTO.
- **Shipping fuel demand.** Methanol ships ordered by Maersk and others could add 11-12 Mt of demand by 2030 (Argus).

#### Metrics to track

| Metric | Why it matters | Where to track it |
|---|---|---|
| **CFR China and CFR India methanol** | largest import markets | Argus, ICIS, S&P Global Platts |
| **Zhengzhou Commodity Exchange methanol futures** | daily liquid Chinese price | ZCE |
| **Methanex posted contract prices (North America, Europe, Asia)** | monthly reference for contracts | Methanex website |
| **China MTO operating rates and margins** | swing demand | CCF Group, Longzhong (OilChem), Argus |
| **TTF and Henry Hub gas** | cost floor | World Bank Pink Sheet; ICE; EIA |

## Other sections

- [Summary](https://www.materialinsights.org/chemicals/methanol/index.md)
- [Overview](https://www.materialinsights.org/chemicals/methanol/overview/index.md)
- [Correlation](https://www.materialinsights.org/chemicals/methanol/correlation/index.md)
- [Production route](https://www.materialinsights.org/chemicals/methanol/routes/index.md)
- [Production](https://www.materialinsights.org/chemicals/methanol/production/index.md)
- [Feedstocks](https://www.materialinsights.org/chemicals/methanol/feedstocks/index.md)
- [Trading](https://www.materialinsights.org/chemicals/methanol/trading/index.md)
- [Movement](https://www.materialinsights.org/chemicals/methanol/movement/index.md)
- [Regulation](https://www.materialinsights.org/chemicals/methanol/regulation/index.md)
- [Characteristics](https://www.materialinsights.org/chemicals/methanol/characteristics/index.md)
- [Emissions](https://www.materialinsights.org/chemicals/methanol/emissions/index.md)
- [Relationships](https://www.materialinsights.org/chemicals/methanol/links/index.md)