Methanex lowered its July ACP by $120 to $620, the lowest since January, citing weak demand and a supply glut. The cut pressures second-half revenue.
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Methanex Corp. lowered its Asian contract price for July by $120 a metric ton, bringing the benchmark to $620. That is the lowest level since January 2024. The world's largest methanol producer attributed the cut to weaker demand from downstream industries and a global supply glut.
The July ACP marks a 16% drop from June's $740. Methanex sets the price monthly for contract sales across Asia, a region that accounts for a large share of its revenue. The cut reflects the oversupply that has built up in the market, Methanex said.
Downstream buyers in olefins and formaldehyde have reduced purchases. Those sectors have seen lower operating rates in recent months, according to industry reports. Methanex did not provide volume guidance for July.
For Methanex, the lower price directly reduces revenue per ton. The company's second-half earnings will reflect the weaker pricing unless volumes increase enough to compensate. Methanex shares trade on the Nasdaq under MX and have fallen this year alongside methanol prices.
The broader methanol market faces a supply glut. New capacity in China and the Middle East has come online faster than demand has grown. Spot prices have traded below contract levels for several months. The July ACP narrows that gap.
The price cut follows a pattern of monthly reductions since April. The ACP has fallen from $800 in March to $620 now. A recovery depends on demand from China's construction and automotive sectors, which consume methanol derivatives.
Methanex operates plants in Canada, the United States, Trinidad, New Zealand, and Egypt. Each plant's cost base depends on local natural gas prices. Plants in Trinidad and New Zealand benefit from low-cost gas. The Geismar, Louisiana plant uses U.S. gas at current Henry Hub prices. The lower ACP compresses margins across the fleet, though low-cost plants will still generate positive cash flow.
Other methanol producers in Asia, including SABIC and Muntajat, use the ACP as a reference for their own contract pricing. A cut of this size pressures them to match or risk losing market share.
For chemical companies that use methanol as a feedstock, the lower price is a tailwind. Producers of formaldehyde and acetic acid will see input costs fall. That could boost their margins in the third quarter.
The weakness in methanol demand mirrors broader industrial softness in Asia, particularly in China. The property sector downturn has reduced demand for formaldehyde-based adhesives. Auto production has also slowed, cutting demand for methanol-to-olefins processes.
The new price takes effect July 1. Methanex's next ACP announcement for August will show whether the supply glut is deepening or stabilizing.
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