MMSA METHANOL NOTES 131231 with Hyperlinks

31 December 2013

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 2013 is put forth for consideration below in no particular order. 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. China suffered an economic slowdown in the first half of the year, which was felt in demand for coal, methanol, and methanol derivatives.
  1. Non-integrated methanol to olefin (MTO) operations commenced, creating a large buying pool whose economics switched from positive to negative as methanol prices climbed throughout the year. This behavior will increasingly drive future global methanol pricing.
  1. With crude values still high, the use of methanol in applications substituting for refined products expanded outside of China, with many of these developments discussed in detail at the MMSA organized 16th IMPCA Asian Methanol Conference in Singapore at the end of the year.
  1. Global methanol prices continued a steady and sustained climb outside of Asia, with the Asian region finally catching up later in the year. The price rise was impacted early by continued restrictions in supply from Trinidad amidst strong US demand recovery, and later by the return of China demand as Southeast Asian methanol production was mostly idled.
  1. MMSA introduced a novel means of tracking the aforementioned Asian methanol prices by developing its contract net transaction reference (NTR) monthly posting for major locations in Asia. The NTR is published weekly along with global coverage in the MMSA Methanol Weekly Analysis at the close of business in Singapore each Friday.
  1. Methanol consumption in the United States increased notably during 2013, the result of an improved economic environment which in turn stems from an increasingly competitive goods manufacturing cost position, and a nascent improvement in construction and construction products.
  1. Strong MTBE cash margins and MTBE affordability into methanol remained extremely high. Production in China remained high, with MTBE again a large contributor to methanol demand growth in China in 2013.
  1. Despite sanctions on Iranian methanol production, the MMSA outlook for reduced, but not eliminated, production and trade to Asia went largely as forecast. The prospect of the removal of sanctions offers some hope for consumers in a high priced market, mostly in Europe, although the total benefit may be limited.
  1. In Southeast Asia, markets remained tight not only due to restrictions in supply from Brunei and Malaysia, but also to strong demand growth from the biodiesel sector as palm oil prices corrected (sank) versus refined products as well as other types of vegetable oil, making palm oil based biodiesel economics positive for the first time in a while.
  1. For a change, more methanol capacity is being added outside of China than has been for many years, with increasingly competitive natural gas based operations in the US (thanks to shale gas production growth there) luring more and more investors to that region of the world. Several projects are being sponsored in the US Gulf region.

The staff of MMSA wishes all a very Happy New Year; 2014 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.