Weekly Market Outlook for China's Methanol Industry Chain (May 19-25, 2025)

China's methanol market is expected to remain volatile during the week of May 19-25, 2025, driven by a mix of bullish and bearish factors, with regional divergence likely.

At the ports, macroeconomic conditions continue to influence frequent fluctuations in futures prices. This has led to cautious sentiment in the spot market. An increase in import arrivals this week is expected to add supply-side pressure, potentially weighing on both futures and spot prices. However, the planned restart of the Lianyungang facility and steady demand from the olefins sector may offer some support. Overall, port prices are anticipated to follow a choppy pattern aligned with futures.

In inland regions, production rates are likely to remain high in the short term. However, seasonal weakness in traditional downstream demand, combined with falling port prices, suggests limited upside momentum. Given relatively low inventories at some local producers, price adjustments may occur based on individual supply-demand balances, resulting in continued volatility.

Key factors to monitor include:

1) Feedstock procurement tenders by olefin producers

2) Updates on new cargo shipments from Iran

3) Uncertainties in macroeconomic indicators

The formaldehyde market in China is expected to continue a narrow and range-bound trend this week.

Supply levels are forecast to remain mostly stable compared to last week. Downstream demand shows no major improvement and is largely driven by rigid procurement. With methanol prices likely to remain regionally divergent, cost support for formaldehyde is expected to be limited.

It is essential to closely watch:

1) Inventory levels in the downstream panel board segment

2) Coordination between upstream and downstream purchasing activity

The glacial acetic acid market in China is expected to remain stable with a soft undertone during May 19-25.

Supply-side pressure is projected to rise notably as Jiantao Phase II and Sinopec Great Wall resume normal operations, and the new Jingmen Qianxin unit begins production, boosting overall output.

Demand-side changes are limited. Particular attention should be paid to the timing of production transitions to ethyl acetate in Henan. Demand for other key derivatives remains stable. Methanol feedstock prices are expected to stay stable to slightly weak.

In summary, the acetic acid market is likely to trend stable-to-weak this week, and market participants should monitor developments on both the supply and feedstock fronts.

The DMF market in China is expected to remain range-bound in narrow consolidation this week.

Supply remains stable, with most plants operating normally. Demand is relatively weak due to seasonal factors, and downstream buyers continue to purchase only as needed.

Methanol, the key raw material, is projected to experience mixed regional performance and volatility, which could impact cost dynamics.

Overall market sentiment is cautious, with a prevailing wait-and-see attitude as participants navigate a supply-demand stalemate.

The propylene market is expected to remain in a state of supply-demand balancing this week.

Supply remains relatively ample, with key production units in Shandong and East China scheduled to restart and resume shipments. However, there are signs of improving demand.

Recent progress in China-U.S. tariff negotiations has boosted confidence among market participants. Terminal factories are expected to increase their procurement activity, potentially providing a price floor.

As a result, the propylene market is likely to exhibit continued volatility, with a potential upward shift in the pricing center.

The PP resin market is expected to remain relatively firm within a defined range during May 19-25, supported by improved sentiment.

While there are relatively few maintenance turnarounds, several producers (e.g., Donghua Energy in Ningbo) are still operating at reduced capacity, limiting the supply of raffia, homo-injection, and fiber-grade PP. Spot availability in Zhejiang is expected to increase only moderately.

The interim progress in trade negotiations between China and the United States has bolstered market sentiment. This, coupled with support from petrochemical ex-works prices, could help stabilize market offers.

On the demand side, there have been no major changes in terminal orders. However, the 90-day tariff grace period has led to a wave of pre-export demand. Downstream factories are expected to increase procurement, helping to absorb earlier price gains.

In summary, the PP market is likely to maintain a mildly bullish tone within a stable range as it consolidates recent increases.