EPCA ’11: China methanol growth to compensate for flat Europe, US

02 October 2011 16:00  [Source: ICIS news]

BERLIN (ICIS)--Prospects of poor growth of methanol markets in Europe and the US as a result of economic uncertainty will be more than compensated by China where robust demand growth continues for the product, a producer said on Sunday.

Many participants, particularly on the buyer side, are convinced that the weak global economy has caught up with the methanol market and predict declining demand as the fourth quarter progresses.

Sellers, and indeed some buyers, dismiss these negative expectations as highly unlikely and expect methanol demand to grow in line with the growth of GDP in Europe and the US.

“Europe is not contracting, it’s at least stable,” the producer said on the sidelines of the 45th annual European Petrochemical Association meeting in Berlin.

However, even if the European market was to shrink, Chinese growth would “completely overcompensate,” he said.

“Asia is tight, and that’s even before you consider these recent outages…it’s structurally tight. There are hardly any fresh capacities coming and demand is growing; even if it grows at 8-9% and not the 10-11% we saw before, that’s still massive.”

The producer said some of its smaller customers have begun to reduce their inventories and had taken less material during September than usual. But it stressed that bulk orders were unaffected and, furthermore, it believes this destocking to be the result of cautious behaviour and not demand destruction.

“The psychology is worse than the actual business. Then next few weeks will tell the truth about demand.”

For more information on methanol, visit ICIS chemical intelligence

By: Ross Yeo
+44 208 652 3214

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