European chemical profile: Methanol

Author: Elaine Burridge

2009/11/16

USES
Methanol's largest three derivatives are formaldehyde, methyl tertiary butyl ether (MTBE) and acetic acid. Other uses are in dimethyl terephthalate (DMT), methyl methacrylate (MMA), methylamines, chloromethanes, glycol ethers and methyl mercaptan. It also has many general solvent and antifreeze uses.

SUPPLY/DEMAND
After a catastrophic first quarter (Q1), demand overall has been improving albeit at low levels. A leading producer says second-half (H2) demand is 5-10% up on H1. But demand for 2009 is estimated to be down by 10-20% on 2008. Supply is said to be balanced. Import volumes have been less than anticipated as outages reduce output in Europe, the Middle East, and elsewhere. Several plants in Central and Eastern Europe are idled. An extra 5m tonnes/year of capacity has come on stream in the Middle East and Asia in 2008/09 and another 5m tonnes/year is due online in 2010 in the Middle East, Asia and Venezuela.

PRICES
There are two quarterly contract prices in Europe: the European contract price and global producer Methanex's European Posted Contract Price (MEPCP). Both Q4 contracts settled at €223/tonne, up by €60/tonne from Q3, and €64/tonne on MEPCP's Q3 level.

Spot prices, after surging in Q3 to a high of around €230/tonne, were hovering around €195/tonne in early November.

TECHNOLOGY
Most production is based on natural gas, naphtha or refinery light gas. The two main processes are from synthesis gas (syngas) in a reformer, and from methane by steam and catalytic autothermal reforming.

Plants of 5,000-10,000 tonnes/day based on cheap gas are being developed to produce low-cost methanol for fuel uses and light olefins production. Dutch producer BioMCN has developed a process to make biomethanol from glycerin, a by-product in biodiesel production. It plans to raise capacity for biomethanol in Delfzijl, Netherlands, to 200,000 tonnes/year in 2010, and to 400,000 tonnes/year in 2011, depending on market conditions. There are plans to restart the No. 2 plant at the site in 2015, initially with 200,000 tonnes/year of biomethanol and 150,000 tonnes/year of conventional methanol, rising to 400,000 tonnes/year of biomethanol and 100,000 tonnes/year of conventional methanol in 2016.

OUTLOOK
Demand growth in Europe is at GDP levels. No investment is expected in Western Europe, with plans for new capacity focused in Russia, although some projects have been delayed or postponed. Global oversupply is likely to force rationalization of uneconomic plants, particularly if prices remain under pressure.

World growth is put at 5%/year, with the strongest growth in Asia, and particularly China. Growth in new derivatives such as dimethyl ether (DME) and other energy uses will be lead by China and other developing countries, with very little additional growth from these expected in Europe.

Profile last published January 15, 2007

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EUROPEAN METHANOL CAPACITY, '000 TONNES/YEAR

Company Location Capacity
Angarsk Petrochemical Angarsk, Russia 200
BASF Ludwigshafen, Germany 480
BioMCN Delfzijl, theNetherlands* 1,000
BP Refining & Petrochemicals Gelsenkirchen, Germany 300
Doljchim Craiova, Romania** 230
Grodno Azot Grodno, Belarus 60
JSC Acron Novgorod, Russia 70
MSK Kikinda, Serbia 200
Mider-Helm Methanol Leuna, Germany 660
Nafta Lendava Lendava, Slovenia** 165
Nevinnomyssk Azot Nevinnomyssk, Russia 120
Novocherkassk Plant of Synthetic Products Novocherkassk, Russia** 220
Novomoskovsk Azot Novomoskovsk, Russia** 300
Shchekino Azot Shchekino, Russia 385
Shell & DEA Oil Wesseling, Germany 400
Siberian Methanol Chemical Gubakha, Russia 1,000
SSME Azot Association Severodonetsk, Ukraine 200
Statoil Tjeldbergodden, Norway 830
Togliatti Azot Togliatti, Russia 975
Tomskneftekhim Tomsk, Russia 750
Viromet Victoria, Romania** 225
Zaklady Azotowe Kedzierzyn Chorzow, Poland** 100
*500,000 tonnes/year not operational **idled
 Source: ICIS Plants & Projects