Global Market Outlook on Methanol

  • An expansion in the methanol producing capacity in the US and the entry of Iranian methanol into the market would shift the trade flow
  • This trend has increased the pressure on high-cost producers, who have started to rationalize 
  • Key regions driving growth:  Global methanol demand, tracks GDP on an average ratio of 1.7 times
  • China is likely to have the highest growth, driven by the increased demand from MTO developments 
  • The Middle East and the US are likely to witness capacity surge, with the Middle East strengthening its position as a major exporter

price-trends-methanol

Demand Market Outlook for Major Methanol Markets

  • Demand market of methanol is dominated by China. Although it is the largest producer of methanol, close to 10 percent of its demand is met through imports 
  • Derivative capacity additions in China would spearhead the demand levels over the next three years [MTO (5.5 MMT/y), CTOs (4.2 MMT/y), MTGs (1.2 MMT/y)]

Industry Best Practices

In the Atlantic Basin arena, methanol price “premiums” existed over the last several years 
Premiums are narrowing and China is becoming demand centric, while the mature markets requirements are fading away

Global Market Size: Methanol

  • The global methanol market is anticipated to grow at a CAGR of 11.81 percent between 2016 and 2025. The methanol market is primarily driven by the following factors: Increasing demand for methanol in China from the olefins market (acceptance of the MTO technology), which is driven by increasing demand for petrochemicals in APAC
  • In addition to this, need for alternatives to conventional transportation fuels and strong demand from conventional markets like adhesives, paints, and plastics 
  • The global methanol sector is now closely connected to the energy complex, through the emergence and growth of Methanol-to-Olefins (MTO) industry in China
  • Methanol would compete with naphtha as a feedstock for ethylene and propylene production through MTO 
  • These products have high correlation to crude, thus making crude oil a proxy feedstock for methanol and hence Chinese market and crude oil are the major drivers of global methanol prices

Global Capacity–Demand Analysis

  • Global methanol capacity and demand would be dominated by China
  • Global market is well-balanced with global demand growing at a CAGR of 7 percent, until 2022 
  • Substantial capacity additions that are planned would suffice the growing demand, particularly from the Chinese market