The three largest derivatives of methanol are formaldehyde, methyl tertiary butyl ether (MTBE) and acetic acid. However, methanol is seeing growing demand in fuel applications such as dimethyl ether (DME), biodiesel and the direct blending into gasoline.
Formaldehyde is used mainly to make amino and phenolic resins which are employed in the manufacture of wood-based products such as panels, flooring and furniture. In North America and western Europe, these are mature markets for formaldehyde with GDP related growth but above average growth has been experienced in eastern Europe and Asia, particularly China.
The main use for MTBE is an octane booster and oxygenate in gasoline. However, it has been phased out in the US following its contamination of underground water supplies and the removal of the oxygenate mandate and liability protection.
In Europe, some MTBE has been replaced by ethyl tertiary butyl ether (ETBE) manufactured from bioethanol to take advantage of the biofuels subsidies although some producers have the flexibility to switch between the two products according to market conditions. However, there is growth in MTBE consumption in Asia and the Middle East, driven by the need to reduce air pollution.
According to LyondellBasell, MTBE will continue to be vital for fuel quality and cleaner emissions. As countries look to remove sulphur and lead and reduce aromatic content in the gasoline pool, MTBE will make a significant contribution to improve fuel quality.
Acetic acid has a number of outlets of which the two largest are vinyl acetate monomer (VAM) and purified terephthalic acid (PTA). Global demand for acetic acid has been growing at a steady 4%/year with PTA sector growth at double this rate driven by polyester demand.
In the area of petrochemical feedstocks, there has been considerable interest in methanol-to-olefins (MTO) and methanol-to-propylene (MTP) technologies with demonstration plants built and the first commercial production imminent in China. One MTO and two MTP projects have been given approval in China with estimated start-ups in 2009-10. Outside of China, projects are under consideration in Trinidad, Nigeria and Iran.
Methanol is also used for the basis of many other chemical products:
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The largest solvent use for methanol is as a component of windscreen wash antifreeze. It can also be used to extract, wash, dry and crystallise pharmaceutical and agricultural chemicals.
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Methylamines are used as intermediates in a range of speciality chemicals with applications in water treatment chemicals, shampoos, liquid detergents and animal feeds.
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Methyl methacrylate (MMA) is employed in the production of acrylic polymers.
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Dimethyl terephthalate (DMT) is used to make polyesters although PTA is the preferred feedstock.
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Methanol and sodium chlorate are used to produce chlorine dioxide, a bleaching agent for the pulp and paper industry.
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Glycol ethers are solvents used in acrylic coatings and newer high-solids and waterborne coatings.
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Methyl mercaptan is used an intermediate in the production of DL-methionine, an amino acid supplement in animal feeds.
Fuel uses to grow
The use of methanol in fuel applications is expected to have a big impact on future demand. Methanol can be used in biodiesel production where it is used in the transesterification step of the process. A large number of biodiesel projects are planned or under construction, and some consultants predict that methanol used in this application could replace the demand lost to MTBE by the end of the decade.
Methanol is increasingly being used to make DME, which can be employed as an alternative to diesel, a supplement to liquefied petroleum gas (LPG) and in power generation. The largest DME market is China where DME capacity is expected to surpass 4m tonnes/year in 2009, according to the International DME Association. Projects are also planned in other countries such as Egypt and Papua New Guinea.
In China, methanol is also being blended into gasoline. There are thousands of gasoline stations that offer M10 and M85 alternative fuels. In Shanxi province, over 2,000 taxis and 100 public buses are operating on M100. Two national methanol fuel standards are planned in China while about 40 regional methanol fuel standards will be issued. Methanol blending in gasoline could provide a sink for excess methanol capacity allowing gasoline to set the floor price of methanol, say consultants.
China is also investigating methanol-to-gasoline (MTG) technology which was first developed in the 1980s but at the time proved to be uneconomic. Yunnan Coal Chemical has been operating a 3,500 tonnes/year pilot plant and plans to build a 200,000 tonnes/year commercial unit.
Methanol can also be considered as an alternative to diesel for electricity generation in small communities where the cost of LNG facilities is too high. Methanol Holdings Trinidad (MHTL) and the University of Trinidad and Tobago have developed an 8.5MW methanol-fed power plant that is providing electricity for MHTL’s production site in Trinidad. Methanol-based power is claimed to be competitive with diesel both in terms of fuel and capital costs, and could also have applications in certain densely populated areas with low emission standards and other niche markets.
Fuel cells based on methanol were first targeted at automotive applications but early applications will now be in portable power generation including power for cell phones and laptop computers. Their use in consumer electronic equipment has been given a boost now that several countries including the US will allow passengers to carry fuel cell cartridges on board airlines. Toshiba plans to launch its direct methanol fuel cell (DMFC) battery charger by April 2009 and DMFC packs for cell phones and personal computers later in the year.
For the methanol industry, this is seen as significant for its psychological impact on consumers and the huge follow-up potential for methanol as a power source for automotive fuel cells. Automobile companies have concentrated on developing hydrogen-based fuel cells but hydrogen poses major problems in handling and the weight of the storage tanks. By 2015 when fuel cell automobiles are ready for the market, consumers will already be familiar with methanol-powered cells in laptops and portable generators.
Markets move into oversupply
On paper, methanol markets have been reasonably balanced for the last few years with the start-up of new capacity such as in Trinidad and Chile balanced by plant closures in North America and Europe. At the same time, demand has been good despite the phase-out of MTBE in the US, taking up any surplus new capacity.
However, in 2008 methanol markets moved into oversupply with demand deteriorating due to the faltering global economy. Formaldehyde, methanol’s largest derivative, is used in several key components in the construction, furniture and automotive industries and has been impacted by the falls in car sales and housing construction.
China is the largest regional market for methanol and the main driver of global markets. China has seen double-digit growth in methanol demand with strong performances in the acetic acid, methanol blending in gasoline and DME sectors.
However, in the last few months of 2008, formaldehyde and DME markets in China slumped substantially. Operating rates for formaldehyde plants, which account for one-third of domestic methanol consumption, fell from their normal 70-90% to 30-50% in the last quarter of 2008, according to the Chinese chemical information service CBI. This reflected shrinking demand for plywood and particle board, particularly in furniture manufacture.
DME is China’s second largest methanol consumer accounting for 20% of demand with more than 95% of DME blended into LPG for urban transportation fuel. However, LPG prices plunged in east China while shrinking demand from industrial LPG consumers further dampened the market. This precipitated a drop in DME prices leading to the idling of much of the country’s capacity.
Demand for methanol into gasoline blending remained more stable owing to China’s methanol prices falling more quickly than gasoline.
Because of declining demand and margins, China has postponed or indefinitely suspended 22m tonnes/year of planned methanol capacity, according to analysis by CBI.
Around 5m tonnes/year of new capacity has been delayed from 2008 to 2009 and others shelved for an unspecified period. As a result, capacity in 2008 grew by 7m tonnes/year – 42% less than had initially been forecast, said CBI. China’s methanol capacity amounts to 28m tonnes/year.
A further 17m tonnes/year of new output due for start-up in 2009-2010 has been temporarily delayed or shelved. The ultimate fate of expansions hinges on recovery in the key downstream markets, concluded CBI.
The Middle East will see substantial capacity increases. According to US consultants Jim Jordan & Associates (JJ&A), present methanol capacity in the Middle East of 10.3m tonnes/year will grow by 7m tonnes/year by 2013. Capacity in Africa will also increase by 2.4m tonnes/year in the same period from the present 1.86m tonnes/year.
The Middle East consumes around 3m tonnes/year of methanol, of which 2m tonnes/year is used in MTBE production. The region exported around 6m tonnes/year in 2007 with Japan, Taiwan and China being the largest markets.
In the US, methanol demand has fallen from just over 10m tonnes in 2000 to 7.8m tonnes in 2008, according to JJ&A. Much of the fall has been due to the removal of MTBE from gasoline in 2006. However, formaldehyde has more recently contributed to the fall due to a decline in new house building where housing represents 40% of formaldehyde demand. US demand for formaldehyde fell 10-12% in 2007 and a further 5-10% in 2008.
The general slowdown in the European economies translates into a reduction in methanol demand with estimates of a 10% fall in Europe. Methanol demand in Europe is weighted to the mature formaldehyde segment although small growth in other derivatives is expected in the long term.
Methanol capacity in Germany, the Netherlands, Norway, Serbia, Slovenia and Romania amounts to 4.26m tonnes/year, calculates JJ&A. However, the average size of the plants is small and many based on relatively expensive feedstock. As high cost methanol production in Europe is rationalized, imports of methanol from low cost regions such as the Middle East will increase.
(Updated: February 2009. Source: 2008 Methanol Forum, 3-5 November 2008, Dubai)