Europe methanol demand to suffer in slowdown

05 November 2008 11:03  [Source: ICIS news]

DUBAI (ICIS news)--A general slowdown in the European economies is going to translate quickly into a reduction in methanol demand with falls of 10% in Europe estimated by some industry players, said an industry consultant at the 2008 Methanol Forum.

“The extensive use of public money [in the financial bailout], while maybe enabling a softer landing, usually reduces flexibility later on and therefore recovery could take longer than in the other regions,” added Etienne Dor, vice-president Europe, Africa and Middle East, of Jim Jordan & Associates.

A further consequence is that sustainability and protection against climate change could be a lesser priority, he said.

“One cannot spend money on financial bailout and climate control” was likely to guide many politicians, said Dor. Subsidies to biofuels, thus biodiesel and ethyl tertiary butyl ether (ETBE), could be among the first casualties.

“This is not encouraging for biodiesel but could bode well for MTBE (methyl tertiary butyl ether) again, especially if methanol prices are low. We could well see some ETBE production switch back to MTBE,” explained Dor.

The European methanol derivatives industry is quite dependent on exports and the weakening of the euro against the dollar could help in this regard, he said, although this would negatively affect US-dollar based energy costs in Europe.

Dor also said that European methanol production was likely to be maintained and that the fight for market share would be among the importers.

The forum is organised by Houston-based consultants Jim Jordan & Associates and the Washington, DC-based Methanol Institute.

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By: Peter Taffe
+44 20 8652 3214

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