NPRA '07: Methanol heads lower as capacity jumps

27 March 2007 20:58  [Source: ICIS news]

SAN ANTONIO, Texas (ICIS news)--Worldwide prices for methanol over the next two years will move into a lower range aligned with the long-term trend, further unwinding the spike in late 2006 caused by supply interruptions, an industry consultant said on Tuesday.

"Last year will represent the peak for methanol globally," said Mark Berggren, managing director of Singapore-based MMSA, which specialises in methanol.

"Demand is growing aggressively, but supply is growing even more aggressively," he said on the sidelines of the NPRA petrochemical conference.

Annual methanol demand growth averaged 3.3% in the 2002-2007 period to reach 38m tonnes/year, Berggren said.

Demand will accelerate to an average 5.4% over the next five years, according to an MMSA forecast.

Most of that demand will be in Asia-Pacific, and particularly in China, Berggren said.

The fastest demand growth will be for methanol use in alternative fuels, especially biodiesel.

Offsetting the demand spurt will be the sharp jump in production capacity starting this year, mainly due to new projects in China.

That will lift the gap between demand and production capacity to more than 15m tonnes by 2009, more than double size of the gap over the last four years, according to MMSA data.

The proposed US methanol contract range of $1.01-1.03/gal for April is down from $1.49-1.55 in March and down from a peak of $1.70-1.80 seen in December and January, according to global chemical intelligence service ICIS pricing.

By: Stephen Burns
+1 713 525 2653

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.

Printer Friendly