MMSA Methanol Notes – 2020-01-28

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MTO Affordability – Methanol Price Rise Yields Reversion to MTO Economic Constraints

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Description

MTO competitiveness versus conventional naphtha crackers finally corrected after several months of improvement, although MTO operation rates are holding for now. Costs to make ethylene via MTO moved back towards naphtha-based ethylene costs. The situation is the result of methanol prices swiftly rising while naphtha remains flat. Still, propylene pricing remains above ethylene (advantaging higher propylene yielding MTO). As such, methanol prices look to be near a ceiling, with buyers remain focused on the return of distressed and lower cost Iranian cargoes. Cash flows moved for hypothetical MTO producers fell near zero, enabling operations for most MTO production but serving notice that buyers will not tolerate much higher methanol pricing given current MTO economic constrains.