MMSA Methanol Notes are one-page summaries of items critical to the methanol and derivatives industries, issued Monday evenings Singapore time. Topics range broadly and include notices and brief overviews of ongoing MMSA updates to its supply and demand forecasts, price forecasts, methanol affordability analysis, MTO economics, and much more. Please browse a list of historic topics below.
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MMSA Methanol Notes – 2021-02-23
US lumber markets remain in a “perfect storm,” driving lumber prices to record levels, and keeping methanol and methanol derivatives an easy “pass through” cost in wood panel applications (including MDF, OSB, and plywood). In other words, methanol’s affordability into construction products continues to be at historic highs in the US.
MMSA Methanol Notes – 2021-02-16
MTO affordability remains a major influence on the health of global methanol markets. When methanol prices are “affordable,” the large MTO consuming sector of demand is engaged, and markets tend to tighten globally. The opposite has been noticed, as well. In the past three months…
MMSA Methanol Notes – 2021-02-09
As the Russian and EU economies improved in the 4th quarter of 2020, Russian methanol demand (including net exports) also improved, although calendar year growth was negative. A modest drop in production has versus the year prior was noted, a victim of price decay in Europe which limited exports.
MMSA Methanol Notes – 2021-02-02
Methanol spot prices were mixed globally. US and EU spot rose on brisk trade. China domestic and CFR fell on affordability concerns among other factors. The MMSA February China Non-Discounted Reference Price is set….
MMSA Methanol Notes – 2021-01-26
With the benefit of another three months of actual data, the global MMSA supply and demand balances have been updated and uploaded for client access. Methanol demand continues to rise as forecast, with an overall assessment that 2020 methanol demand growth will exceed the prior outlook on a global basis thanks almost entirely to the MTO segment.
MMSA Methanol Notes – 2021-01-19
As demand for methanol in China has recovered, higher cost methanol production has been engaged, requiring higher pricing to cover marginal costs of supply. This has improved margins for lower cost producers globally, although methanol prices are approaching levels of affordability into important consuming sectors of demand…
MMSA Methanol Notes – 2021-01-12
When final numbers issue, 2020 methanol demand growth in China, the world’s largest methanol producer and consumer, will be large and positive, helping to set yet another methanol demand record in the world’s second largest economy. Given the unprecedented demand shock experienced earlier in the year, the result is impressive.
MMSA Methanol Notes – 2021-01-05
For the first time in 3 years, United States (US) biodiesel consumption will rise year on year, despite the impact of COVID-19. Data through November 2020 suggest that producers of fatty acid methyl ester (FAME) have been consuming slightly more methanol.
MMSA Methanol Notes – 2020-12-29
As it has for the past 8 years, MMSA recaps annual top developments in the methanol industry. As 2020 is the Year of COVID-19, most industry developments were related to that global plague, which first shut down China before spreading globally and wreaking havoc on normal patterns of life in all corners of the world. MMSA adjusted its forecasts and annual conferences to help clients frame possible outlooks and was an early predictor of the positive response that the MTO industry had on the need for the simple molecule.
MMSA Methanol Notes – 2020-12-22
Global methanol prices have recovered as, if not exactly how, MMSA forecast earlier this year. Despite a second wave of the COVID-19 pandemic, global economies have returned to growth, led by China, which is essentially “post COVID” with acceleration driven by export and demand growth.
MMSA Methanol Notes – 2020-12-15
MTBE cash margins continue to be under siege as the COVID-19 pandemic persists. Profitability for a hypothetical Middle Eastern MTBE producer remain barely positive after a earlier-year collapse. Loss of gasoline demand persists, despite some signs of life in China.
MMSA Methanol Notes – 2020-12-01
Methanol prices and margins globally continue to repair as 2020 finishes in the fashion forecast by MMSA. As the year has progressed, feedstock costs critical to overall cost of production have risen less strongly than methanol pricing, especially in China and in the US.
MMSA Methanol Notes – 2020-11-24
MMSA estimates of US methanol apparent demand through 2020 show that US consumption growth for the simple alcohol has been checked by the global pandemic. Of note, due mainly to US and Trinidad manufacturing issues, net trade of methanol in 2020 will reverse a shrinking trend, expanding notably with imports from new sources.
MMSA Methanol Notes – 2020-11-17
US lumber prices remain strong despite a recent correction. Even with continued methanol price recovery, methanol’s value relative to lumber remains near historic lows. Note that other panel products containing methanol in some fashion, including MDF and OSG, can trend with lumber.
MMSA Methanol Notes – 2020-11-10
MTO affordability continues to drive demand and pricing of global methanol markets. After an about-face which saw MTO operators highly incentivized to purchase methanol, methanol pricing and demand rose as forecast, leading to a situation where methanol prices are much closer to their ceiling.
MMSA Methanol Notes – 2020-11-03
Russia, a large factor in global methanol markets, continues to be impacted by the global pandemic. Russian access to ample and low USD cost natural gas helps allow exports roughly half of its total methanol production, primarily to EU member states. While early 1H 2020 methanol production remained strong, leading to record exports, production has fallen off through November, signs of both troubled domestic demand and limited export value as prices decay.
MMSA Methanol Notes – 2020-10-20
MMSA will again gather methanol players from around the world with the International Methanol Producers and Consumers Association (IMPCA) tomorrow, as a continuation of the industry’s major internationally-focused Asia-based methanol event, this time in a unique online format which will include MMSA outlooks along with interviews of major industry decision-makers. The reason for holding this event virtually is the same one impacting methanol markets: the global spread of COVID-19.
MMSA Methanol Notes – 2020-10-06
Methanol demand growth in China, the world’s largest methanol producer and consumer, has rebounded strongly through the third quarter and is set to make a strong finish to 2020. Data to September and MMSA analysis implies year to date demand is more than 5 percent higher than at the same stage in 2019. If the current trend continues, demand for the full year could be as much as 7 percent higher than last year.
MMSA Methanol Notes – 2020-10-13
Global methanol markets began to rally in early Q3 as demand started to recover following the shock from the global pandemic. Prices in all regions have been on an uptrend over the summer with momentum continuing through the typically strong fall season. During the second quarter, prices fell significantly below the marginal costs to produce (see chart, “Global Methanol Pricing Comparison, taken from the MMSA Methanol Market Weekly Analysis – MMWA) and this led to a cessation in high cost production in China and locations reliant on exports to China.
MMSA Methanol Notes – 2020-09-29
The United States (US) biodiesel consumption in 2020 is trending higher than 2019 levels, despite the impact of COVID-19 on the US economy. Total demand for biodiesel in the US has fallen in 3 successive years with 2019 demand more than 12 percent lower than 2016.
MMSA Methanol Notes – 2020-09-22
With the benefit of another three months of actual data, the global MMSA supply and demand balances have been updated and uploaded for client access. Methanol demand continues to rise as forecast, with an overall assessment that 2020 methanol demand growth will be even higher than the prior outlook on a global basis thanks almost entirely to the MTO segment.
MMSA Methanol Notes – 2020-09-15
The methanol derivative to suffer the greatest impact from COVID-19 was MTBE. As reported in the Note in early summer, profitability for a hypothetical Middle Eastern MTBE producer plummeted to negative levels for the first time in over 13 years. A global collapse in demand for gasoline precipitated a cessation in MTBE demand in early Q2.
MMSA Methanol Notes – 2020-09-08
The Note this week returns to a key component of methanol pricing and market behavior: the “value versus volume,” or affordability curve. This analysis can be considered the opposite of the cost curve evaluation, i.e. it tries to shed light on the question “what is the upper limit of methanol prices?”
MMSA Methanol Notes – 2020-09-01
Methanol markets are swiftly evolving as the ripples of the global COVID-19 pandemic continue to propagate, with the recovery forecast by MMSA mostly on track. China has restarted its economy while other countries are trying to kick start theirs. Methanol operations have slowed tremendously, and global supply chains are better balanced.
MMSA Methanol Notes – 2020-08-25
Methanol prices in China have increased during the third quarter of 2020, though remain slightly below marginal supply costs according to MMSA’s latest cash cost analysis. If coal prices remain at current levels, MTO economics positive, and exchange rates stable then methanol prices have room to inch up during the remainder of the year.
MMSA Methanol Notes – 2020-08-18
MMSA estimates of US methanol apparent demand through 3Q 2020 show that the US consumption of the simple alcohol remains resilient despite the persistence of the global pandemic. However, the source of methanol supply in the US has changed substantially this year.
MMSA Methanol Notes – 2020-08-11
The rally in US lumber prices continues along with a fall in methanol prices, with methanol’s value relative to lumber at all-time lows. Note that other panel products containing methanol in some fashion, including MDF and OSG, usually trend with lumber.
MMSA Methanol Notes – 2020-08-04
Russia, a large factor in global methanol markets, has also been impacted by the global pandemic. Russian access to ample and low USD cost natural gas allows it to export roughly half of its total methanol production, primarily to EU member states.
MMSA Methanol Notes – 2020-07-28
The cyclical behavior of MTO affordability in 2020 underscores the importance of that demand sector on global methanol markets. MTO fortunes have done another about-face, with MTO operators now highly incentivized to purchase methanol. MTO competitiveness versus conventional naphtha crackers has thrown global methanol markets a lifeline.
MMSA Methanol Notes – 2020-07-21
With the benefit of another three months of actual data, the global MMSA supply and demand balances have been updated and uploaded for client access. Methanol demand has performed directionally as forecast, although both failures and successes in the market have played out more than expected, with an overall assessment that 2020 methanol demand growth will be modestly higher on a global basis thanks entirely to the MTO segment.
MMSA Methanol Notes – 2020-07-14
Global methanol markets have reacted to the global pandemic after prices (see chart, left “Global Methanol Pricing Comparison, taken from the MMSA Methanol Market Weekly Analysis – MMWA) fell below marginal costs to produce. As cash margins became negative for many producers, global operating rates plummeted in the past three months, restoring some order to methanol balances globally.
MMSA Methanol Notes – 2020-07-07
Methanol demand growth in China, the world’s largest methanol producer and consumer, has clearly slowed, with a nearly 25-year streak of continuous demand growth at risk. Yet data and MMSA analysis continue to suggest that the slowdown will not exclude the country from showing slight growth by the end of this year, as China has seen the worst of the pandemic.
MMSA Methanol Notes – 2020-06-30
The United States (US) biodiesel industry remains a stable consumer of biodiesel in the first five months of 2020, despite the impact of COVID-19 on the US economy. Total demand for biodiesel in the US grew negatively in 2019 for a third consecutive year.
MMSA Methanol Notes – 2020-06-23
Serious development of hydrogen (H2) fuel cells began roughly 60 years ago, with the first important use for provision of power and water on manned US space flights. There are very real benefits of fuel cells, which create power (DC voltage) through an electrochemical reaction that requires H2 and oxygen, yielding water, CO2, and electricity.
MMSA Methanol Notes – 2020-06-16
Likely the worst change in fortunes for methanol derivatives arising from the COVID-19 pandemic has been that of MTBE. Profitability for a hypothetical Middle Eastern MTBE producer recently plummeted to negative levels for the first time in over 13 years. MTBE demand essentially stopped after March 2020, first in Asia (led by China) and followed by Europe and the America as gasoline demand plummeted in all global markets.
MMSA Methanol Notes – 2020-06-09
The Note this week returns to a key component of methanol pricing and market behavior: the “value versus volume,” or affordability curve. This analysis can be considered the opposite of the cost curve evaluation, i.e. it tries to shed light on the question “what is the upper limit of methanol prices?”
MMSA Methanol Notes – 2020-06-02
MMSA China methanol delivered cash cost curve estimates show that methanol pricing is currently well below floors amidst significantly lower demand and continued oversupply. Approximately half of the producers that supply China are currently selling at a marginal loss and it is a particularly challenging situation those coal-based producers on the upper right part of the curve that are still operating.
MMSA Methanol Notes – 2020-05-26
Looking beyond the current storm in methanol markets, scarcely visible, and long sought, is a possible sea change for the simplest of alcohols in the form of renewable fuels. Methanol is an efficient hydrogen conveyor, thus can play a significant role in global efforts to limit man-made GHG (esp. CO2) emissions. Whether or not the vision is real, or a mirage will likely fall on global regulatory efforts.
MMSA Methanol Notes – 2020-05-19
MMSA estimates of US methanol apparent demand through the first half of 2020 show the negative impact of COVID-19 on need for the simple alcohol. Additionally, as methanol supply focused on a high-priced Atlantic Basin and away from Asia, trade patterns through March changed radically
MMSA Methanol Notes – 2020-05-12
A rally in US lumber prices has been met with a fall in methanol prices, sening methanol’s value relative to lumber back beneath lows which have defined the relationship for the past several years.
MMSA Methanol Notes – 2020-05-05
Russia remains a large force in global methanol markets, with access to ample and low USD cost natural gas, which allows it to export almost half of its total methanol production, primarily to EU member states. Methanol apparent demand growth in 2019 was slightly negative, with the back end of the year hurt by slowed production. Russia primarily uses methanol for the manufacture of formaldehyde, which was challenged as well in 2019. As 2020 begins, data suggests that, given further expected slowdowns in demand, methanol demand may well shrink again in 2020.
MMSA Methanol Notes – 2020-04-28
In just three short months, and thanks to the global spread of COVID-19, MTO fortunes have done an about-face, with MTO operators struggling to varying degrees. MTO competitiveness versus conventional naphtha crackers is under serious attack as naphtha cracker economics continue to benefit from low naphtha pricing. Additionally, MTO breakeven economics are on the edge, with MTO operation rates slowed near term. Costs to make ethylene via MTO moved further above naphtha-based ethylene costs in the past month. Cash flows for hypothetical MTO producers have moved negative, serving notice that MTO buyers cannot tolerate higher methanol pricing. Methanol prices, already low, are being held in check.
MMSA Methanol Notes – 2020-04-21
The latest challenge for methanol markets comes in the form of record-low and negative US benchmark oil-futures, which settled at USD minus 13.1 per bbl on Monday. The sensational nature of this development will likely not have a big short-term impact on methanol prices. In fact, while spot methanol in the US did not trade physically on Monday, certainly there was no immediate panic (although bids lowered as the day progressed). So far, the balance in the USGC appears to be able to weather this most recent storm. Although longer term consequences will keep methanol demand and affordability even less predictable.
MMSA Methanol Notes – 2020-04-14
While 2020 has seen demand growth reduction resulting from the global pandemic, not all news is negative for the methanol industry. China, the world’s largest methanol producer and consumer, has clearly slowed, with a nearly 25-year streak of continuous demand growth at risk. Yet data and MMSA analysis suggest that the slowdown will not exclude the country from showing slight positive growth by the end of this year, as China has seen the worst of the pandemic and given a gradual recovery of global economies by the end of this year.
MMSA Methanol Notes – 2020-04-07
The impact of the global pandemic, with all its unknowns, has been considered in the most recent update to the global MMSA supply and demand balances. Methanol demand is slowing, and expected to drop significantly in the current quarter, especially in the US and Europe as those two economies shut down major portions of their construction and auto industries. Export goods demand in China will slow, although early year, pre-COVID demand in China was surprisingly strong, and as that country comes back to work, their domestic economy is expected to recover.
MMSA Methanol Notes – 2020-03-31
Global methanol markets, impacted by a global pandemic, are at or returning towards marginal costs to produce (see chart, left “Global Methanol Pricing Comparison, taken from the MMSA Methanol Market Weekly Analysis). Although the year began with a fast start, the arrival of COVID-19 first in China and now the rest of the world threatens to flatten global methanol demand, with methanol prices feeling the impact of lowered affordability into essentially every major sector of sales, in particular the large refined product substitution applications.
MMSA Methanol Notes – 2020-03-24
In a turnabout, the US biodiesel industry showed signs of life in the first month of 2020, as the EPA finally provided guidance and tax credits under its Renewable Fuel Standard (RFS). Total demand for biodiesel in the US grew negatively in 2019 for a third consecutive year. However, data for the first month of 2020 suggest that producers welcomed the EPA tax credits, unleashing pent-up demand for methanol. However, the ability of this growth to sustain for the full year is now under threat from COVID-19 effects, including a step change down in energy and refined product (including diesel) pricing.
MMSA Methanol Notes – 2020-03-17
Methanol markets are being significantly impacted by the global COVID-19 pandemic. China is now trying to restart its economy while other countries are in the throes of imposing restrictive conditions on its citizens. This has enormous short term consequences for the trade and demand of all goods and services and will be extremely disruptive on global supply chains and inventory. Against this background, MMSA has developed an early update of its methanol price forecast, described generally here.
MMSA Methanol Notes – 2020-03-10
The storm hit swiftly and decisively, leaving little in its wake. Another “once in a decade” commodity correction has occurred over the past 24 hours, darkening skies already blackened by the specter of COVID-19 contagion. In a few short days, stock markets globally have plunged very close to bear territory, catalyzed by a cratered crude oil and energy complex. Uncertainty is the order of the day. Methanol markets have been captured in the vortex. With a goal to add some visibility, however limited, to where this storm might take the methanol ship, consider some of the fundamental aspects of methanol markets
MMSA Methanol Notes – 2020-03-03
MMSA China methanol delivered cash cost curve estimates show that methanol pricing has returned to cost floors amidst very poor demand. Nevertheless, demand growth post COVID-19 will necessitate higher methanol pricing for needed supply to emerge. As MTO and other operations return, short-term upward potential for methanol prices exists (as marginal demand should increase to create the need for supply from higher cost sources).
MMSA Methanol Notes – 2020-02-25
Since last exploring the topic of methanol and gasoline blends (August 2019), gasoline prices in China have been relatively flat until this month, where they have dropped notably, while methanol prices have cycled at low levels. After adjusting for energy content, methanol values remain at high spreads below gasoline in China, implying a “green light” for blending demand. Nevertheless, demand for gasoline overall has slumped in the wake of COVID-19 and a slowing demand growth, and methanol blending amounts have suffered accordingly.
MMSA Methanol Notes – 2020-02-18
With the benefit of a full year’s data, it can be confirmed that United States methanol demand growth in 2019 mimicked the US macroeconomic growth, despite a bumpy year. Formaldehyde, and acetic acid consumption of methanol have slightly outpaced economic growth, whereas the biodiesel sector had another calendar year decline. With USGC facilities have been running at suboptimal rates, net trade of methanol remained positive in 2019, (i.e. the country continues to import more methanol than it exports), with signs that this position might continue another year unless rates improve.