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Energy Sector Demand Fuels Methanol Production in China and the Middle East

13 April 2012 , 14:27Neftegaz.RU1868

The huge global demand for methanol is set to build up business in the Middle East, while China looks to keep the title of leading petrochemical hub, according to a new report by business intelligence experts GBI Research.

The new report* anticipates that China and the Middle East will benefit in the coming years from the burgeoning methanol market, potentially gaining gigantic revenue thanks to the chemical’s multiple uses.

Global methanol demand is approximately 44.9 million tons per year, with almost 25% of this demand stemming from applications in the energy sector. Methanol and its chemical derivatives are traditionally used in a variety of industrial and consumer products, such as packaging, paints and adhesives.

The greatest demand drivers are likely to be gasoline blending, methanol-to-olefins (MTO) and methanol-to-propylene (MTP), with the MTO/MTP growth being partially due to attractive cost advantages compared to traditional crude oil based naphtha-cracking. In North America, natural gas derivatives are already poised to displace naphtha-based cracking within the petrochemical industry, due to the high cost of crude oil relative to gas-based derivatives.

A significant proportion of demand for methanol stems from the Asia-Pacific region, which accounted for 64% of global methanol demand during 2010 and is expected to maintain this dominance in the future. Over the past decade, China has rapidly emerged as a global petrochemical products manufacturing hub. Producers in China enjoy the advantage of having relatively low operating costs, and, as a result, the country boasts a huge concentration of global methanol players setting up operations. This may tip the balance for China to lead the methanol market in the immediate future.

However, the Middle East has access to low cost natural gas feedstock, making methanol production in this region highly cost-effective. This boosts the attraction of the region’s methanol industry, and there has already been a recent increase in capacity additions as a consequence. This may result in increased exports from the Middle East, and if the same trend continues, other regions will suffer in the wake of rising competition.

Global methanol demand stood at 26.6million tons in 2000, before increasing to 44.9million tons in 2010 at a CAGR of 5.4%. Global demand for methanol will increase to reach 122.6million tons by 2020, demonstrating a CAGR of 10.6% during 2010-2020.



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