APLA: Methanol is in big demand

An abundance of US natural gas and growing Chinese demand to feed methanol-to-olefins projects prompts wave of methanol project announcements in North America

The build-up of new methanol capacity in the US may leave its major supplier, Trinidad and Tobago, looking for new markets. But the impact may not be as profound as it was once perceived.

In October this year alone, there have been four announcements regarding new methanol plants in the US.

US acetyls producer Celanese recently announced it would be producing methanol at its new Clear Lake plant in Texas by October 2015.

Celanese broke ground on the 1.4m tonne/year project earlier this year after receiving approval from the Environmental Protection Agency. The project is a joint venture with Mitsui & Co.

The company also announced during its quarterly earnings call that it has filed air permits with the Texas Commission on Environmental Quality (TCEQ) for a possible methanol plant in south Texas.

The TCEQ website showed that Ticona Polymers, a subsidiary of Celanese, filed five air permit applications, all of which are ­pending, in August.

Additionally, OCI said in October that it was beginning construction of its 1.75m tonne/year Beaumont methanol plant in Texas in November.

And Castleton Commodities International is to build a 1.8m tonne/year methanol plant on the banks of the Mississippi River near New Orleans, Louisiana.

And that is not to mention the dozen other announced projects, most of which are being proposed as a result of China’s burgeoning methanol-to-olefins industry. However, many industry insiders do not believe even half of these projects will ever get built. In fact, some have speculated that as few as three will actually be built.

Sources indicate that the plants proposed for the US Gulf Coast have the highest probability of being built because the infrastructure to transport and process methanol is in place or can be easily accessed. However, there will still be a need for methanol in the US East Coast, one of the highest petrochemical and energy consuming regions in the country. There is very little infrastructure in place, such as pipelines, to get methanol to that market efficiently. It is more cost-effective to import cargoes from Trinidad and Tobago and, occasionally, Venezuela.

Sources believe this infrastructure issue will be a long-term problem.

Furthermore, they add, Trinidad and Tobago will still have the lowest cost of production, so its methanol will be able to continue to compete with the US Gulf.

However, Trinidad and Tobago will have to find new buyers to make up for some of the business lost to the new plants. Market insiders believe Europe and South America will pick up the slack, as the traditional suppliers to those regions send more product to China to sate its growing appetite for methanol.

US methanol imports declined by 5% year-on-year for August 2014, according to the latest data from the International Trade Commission. US methanol imports decreased year-on-year from all its top destinations except for Venezuela, which saw a year-on-year increase in August of 72.7%.

US methanol exports decreased by 12% year-on-year in August. However, exports to Canada, the top destination for US methanol, increased year-on-year by more than two-fold. In fact, many of the top destinations for US methanol had year-on-year increases. However, exports to all other countries fell by nearly 94%.