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Kandy Wong

China could potentially face shortages of methanol – a vital input for several industries – if the Iran war drags on and causes lengthy disruptions to shipping traffic along the Strait of Hormuz, analysts said.
Methanol, also known as methyl alcohol, is a chemical compound that is widely used by Chinese producers. It is both a biofuel and a key raw material for a range of products – from paint and formaldehyde to plastics and synthetic fabrics.
The growing conflict in the Middle East could be a double blow for China’s access to the material: Iran is one of the world’s largest methanol producers, while the Strait of Hormuz serves as a crucial channel for shipping flows in the region.
With US President Donald Trump indicating on Monday that the war could last a month or longer, China was facing disruptions to imports of methanol as well as oil and natural gas, analysts warned.
“Although China is the world’s largest producer of methanol, it also requires significant annual methanol imports to meet domestic demand,” said Rajiv Biswas, CEO of Asia-Pacific Economics in Singapore.
“The closure of the Strait of Hormuz by Iran could significantly disrupt China’s methanol imports if the closure lasts for a protracted period of time,” he added.
Iran is the second-largest global producer of methanol, according to data from Galaxy Futures, and a major Chinese supplier. Last year, China imported 814,691 tonnes of methanol from Iran, down from 1.47 million tonnes in 2024, Chinese customs data showed.
Saudi Arabia was China’s largest source of methanol last year, supplying 3.29 million tonnes of its imports, according to the data.


Iran’s methanol exports have been slowing down since December, leading to a “sharp decline” in the flow of imports to China, according to a report by Zhang Mengchao, an analyst at Galaxy Futures, published on Tuesday.
The slowdown has already caused a drop in activity in China’s methanol-to-olefins sector, which processes methanol into hydrocarbon compounds that can be used to make plastics and other materials, according to Zhang.
Methanol inventories at Chinese ports had also undergone a “slow drawdown”, with the country’s total port inventory standing at 1.47 million tonnes as of the end of February, Zhang said.
Now, there are concerns in China that a closure of the Strait of Hormuz could lead to a significant reduction in future import volumes, which would cause inventory levels to rapidly fall in eastern and southern regions, according to the report.
“As the conflict escalates, methanol spot prices in China’s northwestern region have surged significantly due to market sentiment, intensifying fears of a supply shortage,” Zhang added.
The spot price for methanol in China rose 7.41 per cent to 2,420 yuan (US$351) per tonne on Tuesday, according to financial data provider Wind, amid worries over a tightening supply situation for the material.
China has shown growing interest in using methanol as a substitute for fossil fuels, with national and local authorities issuing more than 70 policy documents related to developing methanol-powered vehicles in recent years, according to a report by China News.
Still, Biswas stressed that the largest share of China’s methanol consumption was supplied by domestic production.
“This gives China considerable resilience to some temporary disruption of methanol imports, although methanol import prices will likely be pushed higher due to the closure of the Strait of Hormuz,” he said.
Other key methanol suppliers to China include the United Arab Emirates, Oman, Malaysia and Trinidad and Tobago, according to Chinese customs data.


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The closure of the Strait of Hormuz is choking off China’s imports of methanol – a vital input for the country’s industrial sector


The closure of the Strait of Hormuz is choking off China’s imports of methanol – a vital input for the country’s industrial sector.


Iran war could ‘significantly disrupt’ China’s methanol imports: analysts

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}The closure of the Strait of Hormuz is choking off China’s imports of methanol – a vital input for the country’s industrial sector

The closure of the Strait of Hormuz is choking off China’s imports of methanol – a vital input for the country’s industrial sector