16 November 2012 09:31 [Source: ICB]
Global methanol capacity expansion has slowed, while existing facilities in China are not running at full capacity
New applications that will convert methanol into olefins and gasoline evolving in China are likely to fuel Asia's demand for the base chemical, an industry consultant says.
"All these innovations are risky, but China doesn't seem to mind. China is hungry for energy/power," Mark Berggren, managing director of Methanol Market Services Asia (MMSA) told ICIS at the sidelines of the 15th International Methanol Producers and Consumers Association Conference in Singapore.
Chinese MTO producers can afford to purchase methanol at higher prices, Berggren said. In China, methanol is largely derived from coal, given the country's huge reserves of this fossil fuel.
Based on current cost of coal, methanol prices in China is likely supported at around $320/tonne (€250/tonne) CFR (cost and freight) China, with a strong upside capped at around $450/tonne CFR China, according to Berggren.
The rest of Asia, meanwhile, has a share of 10m tonnes/year of global demand, which is expected to hit 59.8m tonnes, he said.
On the supply front, global methanol capacity expansion has been slowing down, while existing facilities in China are not running at full capacity, partly on high production cost. The cost of producing methanol in China ranges from around $250/tonne to $420/tonne. On 7 November, methanol prices were at $362-365/tonne CFR China.
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