Methanol
07 August 2000 00:00 [Source: ICB]
Against all odds the methanol market is likely to remain
balanced for some months to come. North American closures have
saved the day
Supply/demand
Over the past 12 months four major methanol facilities have
started up: the 850 000 tonne/ year Saudi Methanol unit; the 660
000 tonne/year Iranian Kharg Island plant; the825 000 tonne/year
Qafac plant in Qatar and the recent startup of the 860 000
tonne/year Titan plant in Trinidad. However, instead of the global
oversupply anticipated this year the market has been tight,
particularly in Europe where prices had lagged behind.
Production problems at Trinidad's TTMC plants, the closure of
uneconomic capacity in the US (by Georgia Gulf, Ashland, Methanex
and BP Sterling) and in Canada (by Methanex) which took in total 3m
tonne/year of capacity out of the global market, and delayed
startup of the Titan unit, all combined with strong demand and high
gas prices to send methanol prices soaring.
For some European consumers, relying on Titan product, the
shortage became acute as major European units also had maintenance
shutdowns.
Uses
Around 35% of global methanol is used to produce formaldehyde,
27% for MTBE and 9% for acetic acid. MTBE's share has been growing,
but the decision to phase out its use in California and the
challenges to its mandated use in other non-attainment areas
threatens its future in the US.
However, increased use in Europe and Asia could compensate.
Methanol use in fuel cells and as a feedstock for olefins
production could provide a boost to consumption later this
decade.
Technology
Methanol is produced in processes based on natural gas, naphtha
and refinery light gas. Synthesis gas, a mixture of carbon
monoxide, carbon dioxide and hydrogen, is first produced in a
reformer.
The gas is compressed and fed to a reactor containing
copper-based catalysts where the crude methanol is produced. The
methanol is recovered and distilled. Plant designers are developing
mega-capacity plants in the 5000-10 000 tonne/day range that could
produce low-cost methanol for fuel uses and light olefins
production when based on stranded natural gas. Two approaches are
being taken: some are pursuing pure oxygen addition resulting in
total autothermal reforming; others are taking the non-oxygen route
with compact reforming and low pressure methanol synthesis.
Pricing
Methanol prices have risen steadily this year. In January,
European spot prices were DM215-225/tonne. Currently, European spot
prices are talked in the DM410-420/tonne range, down from the highs
of close to DM450/tonne achieved at the height of the shortages in
June.
Quarter three contract prices in Europe are E210/tonne fob
Rotterdam which compares with E128/tonne for quarter one and
E142/tonne for quarter two.
###9314###
This quarter three contract price was initially in line with US
prices; however, news of the Texas City and Kittimat closures and a
further several days' shutdown at the Titan plant have sent US spot
numbers to 67-68 cent/gal and July contracts now look likely to
settle at 60 cent/gal with nominations for August in the 65-66
cent/gal range.
EUROPE/MIDDLE EAST METHANOL CAPACITY, '000 TONNE/YEAR
| Company |
Location |
Capacity |
| BASF |
Ludwigshafen, Germany |
450+ |
| DEA |
Wesseling, Germany |
400 |
| Schwarze Pumpe |
Holstein, Germany |
120 |
| Ruhr-Oel |
Gelsenkirchen, Germany |
240++ |
| Methanor |
Delfzijl, Netherlands |
840 |
| Statoil |
Tjedbergodden, Norway |
830 |
| Doljchim |
Craiova, Romania |
180 |
| Viromet |
Victoria, Romania |
180 |
| Nafta-Lendava |
Lendava, Slovenia |
180 |
| Severodonetsk |
Severodonetsk, Ukraine |
650 |
| North Africa and Middle East |
| Napetco |
Marsa El Braga, Libya |
660 |
| National Methanol |
Al-Jubail, Saudi Arabia |
950 |
| Saudi Methanol |
Al-Jubail, Saudi Arabia |
3830 |
| National Petchems |
Kharg Island, Iran |
660 |
| Qafac |
Umm Said, Qatar |
825 |
+ swing ammonia ++ 50% Veba - 50% PDVSA * Russia's nameplate
capacity of around 3.5m tonn/year ran at only around 40% of
capacity in 1999. Operating rates are likely to be higher this
year.
Sources: various
Outlook
Global demand growth is expected to be around 5% in 2000 and
with gas prices coming off slightly and prices moving up, even
North American producers could make money in quarter three. Europe
should benefit from the TTMC plants back at full production and the
end to Titan's startup problems. However the caveat is that further
US shutdowns could leave global markets short. The pressure to sell
the Methanor units (840 000 tonne/year) and ICI's methanol
operation (550 000 tonne/ year) remains, in spite of the temporary
rise in profitability. Consultants believe it will be hard for them
to coexist beside the superior economics of the huge 3m tonne/year
units expected onstream in 2004. Closures could offset the impact
of new capacity expected on-stream mid-2000 in Equatorial Guinea
and South America.
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial
to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free
trial to ICIS Chemical Business.