New US methanol capacity will depend on exports to China

09 February 2018 20:44 Source:ICIS News

NEW ORLEANS (ICIS)--New US methanol capacity coming online soon will have to depend on exports to China, a speaker at a methanol conference said on Friday.

Mark Berggren, managing director of  Methanol Market Services Asia, said growth in global methanol demand during the next decade will depend on China, which continues to drive global demand with its methanol-to-olefins (MTO) plants.

“Most of the demand growth is in China, and most of it is in methanol-to-olefins (MTO) demand,” Berggren said. He added that new US plants expected to start soon, such as the OCI Natgasoline unit in Texas, will have to be largely devoted to the China MTO market.

“This is the market for these new US plants,” Berggren said. “It’s the only game in town for them.”

Berggren spoke at the 6th IMPCA Mississippi Conference America, which ended on Friday.

Higher methanol spot and contract prices at the end of 2017 and early this year have changed the mood in the methanol industry, Berggren said.

“It’s good to be a methanol producer in the US Gulf again,” Berggren said.

Another speaker agreed.

Dave McCaskill, vice president of methanol and derivative services at Argus Media, said the seasonal upturn in spot prices that usually occurs at the end of the year and first of the new year is likely over, but said he still expects methanol prices will not go below $300/tonne this year.

That means the current methanol spot price around $410/tonne would have to drop 27% from the current spot level to get there, or fall back to where spot prices were in October and November 2017.

McCaskill said he expects some methanol derivatives, such as acetic acid, to rebound this year. He also looks for an improved US GDP outlook and stronger energy prices to benefit the methanol industry.

“It’s likely a seller’s market this year,” McCaskill said. “We’re in a little bit of a higher oil environment, which will raise methanol.”

By Lane Kelley