APLA ’09: Brazil biodiesel mandate bodes well for methanol

09 November 2009 00:48  [Source: ICIS news]

MEXICO CITY (ICIS news)--A jump in Brazil’s biodiesel mandate to 5% next year bodes well for the methanol industry, as the increase will translate into additional demand for the product, market sources said on Sunday.

Methanol is used as a reagent in the production of biodiesel.

Brazil’s 5% biodiesel mandate came three years ahead of schedule. The country began blending the biofuel at a mandated 2% in 2008, moving that to 3% later that year and on to 4% in 2009.

The 5% mandate, which was originally scheduled to go into effect only in 2013, is expected to boost Brazil’s biodiesel demand to around 2bn litres/year starting in 2010.

“We are watching that [market] very closely,” an official with methanol producer Methanex said on the sidelines of the 29th Latin American Petrochemical Association (APLA) annual meeting in Mexico.

Methanex supplies methanol to Brazil from Chile where the company has four plants with combined capacity of 3.8m tonnes/year.

However, only one of those plants is in operation due to natural gas shortages from neighbouring Argentina.

The official said Methanex expects to restart a second plant in Chile in December, resulting in a production increase of around 20% in 2010.

The APLA conference continues through Tuesday

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By: William Lemos
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