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.
“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.