Global methanol demand increased 23% from 2010 to 2012 and
annual demand is expected to rise from 61 million tons in
2012 to an unprecedented level of 137 million tons
in 2022, according to a market study released Monday from
These rapid demand
increases are significant, particularly when the numbers are
compared to the economic downturn of 2008 to 2009, when the
increase in annual demand slowed to just 4%.
This demand growth is being led by growth in China across all
derivatives, as well as fuels applications in China and the
rest of the world.
Methanol is a key option for monetizing gas or
coal, said Mike Nash, IHS global director of syngas
chemicals. An abundant supply of low-cost North American
shale gas is driving methanol capacity additions in the US.
"The shale gas revolution is a major game-changer; mothballed
methanol units have started back
up -- and one Methanex unit has been relocated from Chile
to Louisiana with considerations of moving another unit," he
added. "Coal supplies in China are also driving projects there, as well,
particularly as it relates to using cheap methanol supplies
derived from coal to produce olefins.
Geographically, China remains the growth center for
methanol demand, with an average annual growth of slightly more
than 12%, while the rest of the world is growing at just below
3%. China methanol consumption will triple from 31 million tons
in 2012 to 97 million tons in 2022, according to the
Traditional uses for methanol include derivatives such as
formaldehyde, MTBE, a fuel octane enhancer; acetic acid and
methyl methacrylate, a plastic additive. With China at the
epicenter of global growth, fuels applications are one of
the primary demand drivers.
Methanol demand in the gasoline pool is expected to increase
from nearly 5 million tons in 2012 to just
over 11 million tons in 2022. At blend ratios of 15%
and slightly increased gasoline consumption trends, methanol
consumption could rise to 15 million tons.
Other possible uses for methanol include being used in
gasoline blending, which is a highly political issue, and
currently only happening in China," said Nash. "Im
not sure if it can happen in the US due to the powerful ethanol
lobby that exists, but if it did occur, the impact on demand
would be significant.
Another potential use for methanol is biodiesel
production involving methanol as a feedstock, which is also a highly
political issue, but we anticipate the growth of this use
stalling, although there are some mandates for its use, such as
in the US, some Southeast Asia countries and Turkey," Nash
"In the European Union and elsewhere, its
use seems to have come unstuck, particularly since the usage of
crops for biodiesel are seen to compete directly with food
production, and non-food crops such as algae are either in
their infancy or dont produce enough yields to be
Other possible future uses for methanol noted in the IHS report
could include methanol as dimethyl ether (DME) on ships as
bunker fuel in certain close-to-shore zones in Europe, when new low-sulphur rules
go into effect, and insufficient supplies of low-sulphur marine
diesel/fuel oil to satisfy demand. A trial is being conducted
now to test feasibility.
China has become by far the largest methanol producing country
in the world, representing 54% of world capacity and 43% (26.5
million tons) of world methanol production in 2012.
The global methanol industry is now reaching the end of a
significant wave of capacity expansions. Since 2007, capacity has
been added at the rate of 14.3%/year, according to IHS, in
an industry where demand had been growing at around 8.6%/year.
However, Chinese capacity utilization is only around 50%, since
China adjusts operating rates to balance world
supply and demand. China is nearing the end of a major capacity
expansion wave, with only an
additional 7.5 million tons of new capacity for the
merchant market expected to come on stream through 2022. This
leaves well over 40 million tons of new China
methanol capacity integrated to MTO/MTP coming online during
the forecast period.
The vast majority has been added in China driven by demand
growth, particularly to supply emerging applications. Large
methanol-to-olefins (MTO)/methanol-to-propylene (MTP) and or
DME- integrated complexes have been and will continue to be
built, consuming massive quantities of methanol dedicated to
these downstream derivatives.
According to the IHS report, even with Chinas massive
buildup of methanol capacity, demand growth in China is projected to be so rapid (more than
12%/year) that, by 2022, if imports were unavailable, the
domestic capacity would need to operate at almost 100%
utilization to meet domestic demand.
By 2022, without additional Chinese capacity, IHS estimates
that imports will not only be an economic-driven opportunistic
option to secure low-cost methanol, it will also be a
requirement to meet local demand.
Northeast Asia, Europe and North America were the worlds
largest importing regions of methanol in the world in 2012,
representing more than 80% of total world import
Going forward, Europes import levels will
increase only moderately, whereas Northeast Asia imports are
forecast to triple during the period of 2012 to 2022. North
America, on the other hand, becomes essentially balanced by
2022, as large new regional capacity is built to take advantage
of plentiful, cheap shale gas and substantial regional demand.
Conversely, the Middle East and South America are and remain
the two largest exporting regions for the methanol industry, representing
approximately 70% of the worlds export supply.
For more details on the study, visit the IHS website.