MMSA Methanol Notes with Hyperlinks

31 December 2012

At this time of the calendar year, one can find many “top” lists of various sorts, such as movies, books, and people, to name a few. In that spirit, a list of the top developments in the methanol industry in 2012 is put forth for consideration below. These are bound to omit all key developments, and all comments are welcome. The text also contains hyperlinks to previous Methanol Notes™ containing greater detail. These can be accessed using client login credentials; please contact MMSA for any needed assistance.

  1. “Old” capacity in the US Gulf and New Zealand was restarted, based on better access to lower cost natural gas feedstocks.
  1. An oversupply in the acetic acid industry continued to plague the economic performance across that chain, creating malaise for producers globally.
  1. Natural gas affordability in the US stimulates interest and action in new projects involving methanol in North America, creating a renaissance of a once-dead industry, and shifting strategic emphasis throughout the global methanol and derivatives chain.
  1. Spot thermal Chinese coal prices dropped 25 percent on the back of a slowdown in growth of the Chinese economic engine during a “soft landing” engineered largely by the government. This essentially made coal based methanol even more attractive as a means to substitute for refined products, especially in China.
  1. This lowered coal price was not similarly reflected in methanol prices, which remained relatively flat throughout the year, yielding strong and stable margins, and further attracting interest in the industry from financial entities.
  1. The commercial development of methanol blends with gasoline continued in Shanxi province, where a methanol-gasoline “demonstration” project sponsored by key government agencies as well as local auto and bus manufacturers is underway.
  1. Strong MTBE cash margins and MTBE affordability into methanol remained extremely high, and capacity and production in China surged, with MTBE the third-largest contributor to methanol demand growth in China in 2012, after MTO and gasoline blending.
  1. The impact of Iran sanctions on methanol production generated a great deal of concern for the methanol markets globally, particularly in Asia early in 2012, and Europe later in the year. However, the MMSA outlook for reduced, but not eliminated, production and trade to Asia went largely as forecast.
  1. Lead by MTO consumption, where methanol enables competitiveness versus conventional olefins manufacturing capability, demand growth in China continues to set records, adding almost 4.0 million metric tons of consumption.
  1. New Chinese production capacity continued to issue in record amounts, with almost 8.8 million metric tons of new methanol production capacity added during 2012, mostly in the central, coal based provinces, leading to record production numbers, largely to integrated downstream consuming complexes. Much natural gas based production was idled during the year, limiting the impact of the massive increase.

The staff of MMSA wishes all a very Happy New Year; 2013 will have its own top ten events, and MMSA will be there to analyze them in its usual fashion, looking forward to continued communication with clients. Thanks once again for your support.