US will not need to import methanol in five years – analyst

26 September 2012 16:31  [Source: ICIS news]

HOUSTON (ICIS)--In five years, the US will have enough methanol plants operating to stop importing most of its material from Trinidad and South America, a stock analyst who covers the industry said in a report released on Wednesday.

The report, by Steve Hansen with Raymond James in Vancouver, said much or all of the methanol the US imports from Trinidad and Venezuela - roughly 5m tonnes annually - should be satisfied by plants scheduled to be built, restarted or moved during the next five years.

Trinidad accounted for 69% of US methanol imports in 2011.

Dependence on the Caribbean country’s seven methanol plants dates back to the period of 2000-2006, when high natural gas prices in the US led to an exodus of domestic producers and shuttered most American plants, Hansen noted.

But low gas prices brought about by the shale gas boom have led to a renaissance in US methanol during the past two years.

“However, with 4.0 to 5.0m tonnes of new incremental capacity expected to arrive on US shores over the next five years,” Hansen said in his report, “the US is expected to become relatively self-sufficient, forcing these same Trinidad and Venezuelan volumes into alternative end-markets.”

Hansen noted that four companies have made firm commitments recently to putting methanol plants in the US Gulf within the next few years. Orascom Construction Industries (OCI) started one in July, and LyondellBasell, Methanex and Celanese plan to put units in Texas or Louisiana within the next two years.

Such plants show that the pendulum has swung back in favour of domestic production, with cheap natural gas prices as the lure.

The new pattern for North American methanol also will require plants in Trinidad and Venezuela to look to Asia and Europe for new customers, Hansen said in his report.

“Though not ideal, much of this volume is likely to go into Europe, with Middle East volumes in turn focusing more on demand out of China and India,” Hansen said.



By: Lane Kelley
+1 713 525 2653



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