Methanol won't often dip below $250/t - analyst

05 November 2008 12:37  [Source: ICIS news]

DUBAI (ICIS news)--Methanol prices are highly unlikely to go below $250/tonne on a sustained basis but may occasionally dip to $200/tonne, the president of methanol market analysis and intelligence provider Jim Jordan & Associates said on Wednesday.

Global capacity is outpacing demand mainly because of the sharp downturn in demand, said Jim Jordan, in his world methanol review presented at the 2008 Methanol Forum.

Investment will slow up to 2011 and projects may not come on stream as planned, Jordan added.

Jordan said that Asia in general, and China specifically, will be the swing factor in the market, with methanol blending in gasoline and dimethyl ether (DME) production driving demand along with traditional uses.

China may continue to import 30-40% of its needs, added Jordan.

Methanol capacity in the Middle East, presently at 10.3m tonnes/year, will grow by another 7m tonnes/year by 2013, he said.

The Middle East consumes about 3m tonnes/year of methanol, with methyl tertiary butyl ether (MTBE) the largest derivative, leaving the region to export approximately 6m tonnes in 2007.

US methanol demand is down to 7.8m tonnes in 2008, compared with 9m tonnes in 2005. Capacity in the US is only 950,000 tonnes/year, said Jordan.

Much of the fall in US demand is due to the removal of MTBE from gasoline in 2006, though the remaining MTBE producers in the US have seen good prices and margins for their exports, said Jordan.

Formaldehyde has also contributed to the drop in US demand due to a decline in new house building.

However, housing represents 40% of formaldehyde demand and other uses were growing, said Jordan.

The 2008 Methanol Forum is organised by Houston-based Jim Jordan & Associates and the Washington, DC-based Methanol Institute.

For more on methanol visit ICIS chemical intelligence
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By: Peter Taffe
+44 20 8652 3214

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