CMAI forecasts flooded methanol market

By OGJ editors
HOUSTON, Nov. 4 -- The global methanol market will face an overcapacity situation despite future increases in demand, according to Houston-based petrochemical consultant Chemical Market Associates Inc. (CMAI).

During its 5-year study period, beginning in 2006, CMAI in its 2006 World Methanol Analysis forecasts world demand for methanol to be about 38 million tonnes/year. Meanwhile, nearly 27 million tpy of new capacity is planned for the same period and most expansions are not demand-driven, it said.

The annual study, which provides information on supply, demand, production, history, and forecasts for methanol capacity, trade, and pricing, said overall methanol demand is on the rise but in some regions demand during the period studied is declining.

The largest absolute growth for methanol will be fueled by the Middle East and Northeast Asia, most notably China, as this country continues to build infrastructure to support its economic development.

Methanol demand in North America will decline as the methyl tertiary butyl ether phase-out programs sweep the US by 2007. This will eliminate the use of 9 million tonnes of MTBE by 2008, the equivalent of more than 3 million tonnes of methanol.

Also, Europe is rapidly replacing MTBE with biofuels. It is expected to reduce MTBE production by 1.8 million tonnes (about 600,000 tonnes of methanol) from the 2000 peak consumption timeframe to the end of the study period.

CMAI said the probability is high for the planned methanol-to-olefins complex in Nigeria in 2009. This addition, which will interact independent of the methanol industry and derivatives, will create almost 2.2 million tonnes of new demand. Without this new application, the growth in methanol demand of 8.7 million tonnes over the study period could be reduced by 25%, and the average growth for the industry would decrease to 3%/year from 4.5%/year.

New dimethyl ether production is expected to further stimulate methanol demand, CMAI said.

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