FocusChina annual methanol demand to spike on MTO, MTP projects

30 October 2012 08:38  [Source: ICIS news]

By Heng Hui

SINGAPORE (ICIS)--China’s annual methanol demand for non-traditional uses is expected to grow by more than 20% in the next three years if all its projects that aim to derive olefins from the coal-based chemical start up as originally planned, industry sources said on Tuesday.

Sixteen methanol-to-olefins (MTO) and methanol-to-propylene (MTP) projects spread across the country with a total capacity of around 10m tonnes/year are due to come on stream from 2012-2015. (Please see tables below)

The country’s current methanol consumption for non-traditional sectors, which include MTO and dimethyl ether (DME), currently stands at more than 10m tonnes/year, about a third of China’s total methanol consumption at about 30m tonnes/year.

China is expected to require about 24m tonnes in additional supply over three years to feed into these mammoth MTO projects in the next three years, industry sources said.

By 2015, MTO/MTP is expected to account for more than 17% of China’s methanol demand, assuming all the other projects came on line as planned.

MTO and MTP, along with dimethyl esters (DME) and gasoline blending, are lumped together as the non-traditional uses of methanol.

From the traditional downstream sectors – such as acetic acid, formaldehyde, methyl tertiary butyl ether (MTBE), polyacetal (POM), methyl methacrylate (MMA) and methyl amines – methanol consumption is estimated to grow at a slower pace of 7-8%, largely in line with China's economic growth that used to be in double digits.

Four of the 16 MTO/MTP projects – with a combined capacity of 1.76m tonnes/year have started production this year – but none of them could run at full capacity, partly because of the poor petrochemical markets this year amid the global economic slowdown, industry sources said.

Construction of the remaining 12 projects is ongoing, but industry players doubt their successful start-up in the near term.

An expected sharp increase in demand for methanol because of the MTO projects would help boost the prices of the chemical, market sources said.

Via MTO projects, methanol will serve as a cheaper alternative to naphtha as feedstock for polyolefins production, they said.

Methanol prices in China were assessed at $360-365/tonne (€281-285/tonne) CFR (cost and freight) China in the week ended 26 October, up $2/tonne from the previous week, according to ICIS.

On the other hand, Asia’s naphtha prices were at $960.50-963.50/tonne on Tuesday morning, rising $3.50-4.50/tonne from Monday because of tighter supply amid rising demand.

China, the second biggest economy in Asia, is solely pursuing MTO and MTP projects in Asia given its huge reserves of coal – the basic raw material for methanol.

Coal-produced methanol provides the country with a strong cost advantage over naphtha-based petrochemical production during times when oil prices are high.

But these projects entail heavy investments and the technology processes remain at a nascent stage, hence major hurdles to the industry’s development still need to be overcome, industry sources said.

China’s coal reserves, though huge, are being depleted fast and producers find that selling coal offers better profitability amid rising prices, industry sources said.

The Chinese government is also restricting granting approvals on new projects to ensure a more efficient use of resources and aimed at preventing methanol overcapacity in the country.

China’s National Development and Reform Commission (NDRC) set the minimum capacity of 500,000 tonnes/year for coal-to-chemical projects.

From the ecological point of view, coal-to-olefin projects spell heavy pollution in a period when economies are targeting to reduce their carbon footprint, analysts said.

Logistics wise, high costs in transporting the petrochemicals derived from coal are likely as project sites are too far away from major consumer markets, they said.

“It is a long way off towards mass scale development,” a trader in Singapore said.

Table 1 Existing methanol to olefins projects

Project	Location	Unit	Capacity	Status
Datang International Power Generation's	Inner Mongolia	MTP	460,000 tonne/year (1.68m tonne/year integrated methanol supply)	Low operating rates (50-60%)
Shenhua Group (Baotou)'s	Inner Mongolia	MTO	600,000 tonne/year (integrated 1.8m tonne/year methanol unit)	Stable operation, unknown rates
Shenhua Ningxia Coal Industry Group's	Ningxia	MTP	500,000 tonne/year (integrated 1.67m tonne/year methanol unit)	Below 50% (70-80%)
Sinopec Zhongyuan Petrochemical	Henan	MTO	200,000 tonne/year	80-90%
TOTAL			1,760,000

 

Table 2 Upcoming MTO approved projects (planning projects excluded)

Project	Location	Unit	Capacity (tonne/year)	Start date
Ningbo Heyuan (Skyford)	Zhejiang	MTP	600,000	end Nov 2012
Zhejiang Xingxing New Energy Technology’	Zhejiang	MTO	600,000	Pending and no exact start up date
Wison Nanjing Clean Energy	Jiangsu	MTO	300,000	2013
Zhengda (Changzhou) New Material	Changzhou	MTO	1,000,000	2013
Shaanxi Pucheng Clean Energy Chemical	Shaanxi	MTO	700,000 (300 kt/yr of ethylene, 400kt/yr of propylene; integrated methanol capacity 1.8 m tonne/year)	2014
Ningxia Coal Industry	Ningxia	MTP	500,000	2014
Shanxi Coking	Shanxi	MTO	600,000 (existing methanol capacity 200,000)	Q4 2014
Shenhua Shenmu Chemical Co	Shaanxi	MTO	600,000	2014
Jiutai Energy (Zhungeer)	Inner - Mongolia	MTO	600,000	2014
Sinochem (Zhonghua) YiYe	Shaanxi	MTO	800,000	2014
Shaaxi Yanchang (join venture with Zhongmei)	Shaanxi	MTO	600,000	2014
Xinjiang Guanghui Coal Chemical Industry	Xinjiang	MTO	1,000,000	2015
TOTAL			7,900,000

($1 = €0.78)

Rachel Qian contributed to this article

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Heng Hui
+65 6780 4359

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly