APIC '12: Methanol-to-olefins growth to weaken DME price link

18 May 2012 09:44  [Source: ICIS news]

KUALA LUMPUR (ICIS)--Growth in the use of methanol in olefins production in coming years could move methanol pricing away from the ceiling currently set by dimethyl ether (DME), a consultant said on Friday.

After exponential growth over the last five years, demand for methanol in olefins production will moderate but still be a robust 27%/year in 2012-2017, marked by a wave of new capacity at the end of the forecast period, said Mark Berggren of Singapore-based consultancy MMSA.

China already has four methanol-to-olefins plants in operation, with a fifth plant coming soon, Berggren told the annual Asia Petrochemical Industry Conference (APIC).

"China loves methanol," Berggren added, pointing out the close relationship between the floor of the methanol price and the cost of coal in China.

On the upside, the DME price currently provides a ceiling on the methanol market, because if methanol rises above DME values, around 5m tonnes/year of methanol demand would be lost, mainly in China, he said.

As the methanol-to-olefins segment builds its market share, that DME ceiling on methanol will be weakened, Berggren predicted.

By: Stephen Burns
+1 713 525 2653

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