Methanol Market in China Very Eventful Since 2008
Year:2015 ISSUE:24
COLUMN:ORGANICS
Click:246    DateTime:Jan.05,2016
Methanol Market in China Very Eventful Since 2008

Production

Annual growth of China’s methanol capacity slowed year-by-year during 2010-2013, dropping to 8.3% in 2013, being nearly 30% lower than in 2010. Owing to the rapid development of coal-to-olefin (via methanol) projects, the growth of methanol capacity increased drastically in 2014, reaching 22.7%. Eight new methanol-to-olefin enterprises appeared in China that year – Shenhua Ningxia Coal Industry Group Co., Ltd. Second-Phase Olefin Project, Ningxia Baofeng Energy Group Co., Ltd., Yanchang Coal Yulin Energy and Chemical Co., Ltd., China Coal Shaanxi Yulin Energy and Chemical Co., Ltd., Shandong Shouguang Luqing Petrochemical Co., Ltd., Shandong Yuhuang Chemical (Group) Co., Ltd., Shandong Shenda Chemical Co., Ltd. and Shaanxi Pucheng Clean Energy Chemical Co., Ltd. The total methanol capacity was 68.61 million t/a in 2014. The capacity of methanol units matched to olefin production was 13.42 million t/a, 19% of the total.
Growth slowed down somewhat in 2015. By June, only three new methanol units started production, and the total capacity of methanol was 69.08 million t/a. It is expected that capacity at the end of 2015 will be 72.00 million t/a, and the year’s growth will be only 5%.
The operating rate of methanol units in China has risen constantly since 2009, reaching 53.6% in 2014, 12% higher than in 2009. Methanol producers in China today are located mainly in Inner Mongolia, Shandong and Shaanxi. In 2014, China hosted 45 methanol producers with capacity exceeding 500 kt/a, that’s 22% of the producers, 5% more than in 2013. The combined capacity of methanol producers of that scale was 39.90 million t/a, or 58.2% of the national total.

Table 1    Supply of methanol in China, 2008-2014

Year    Capacity (kt/a)    Output (kt)    Import amount (kt)    Export amount (kt)    Operating rate (%)
2008    23 380    11 100    1 430    370    47.5
2009    27 170    11 230    5 290    10    41.3
2010    37 570    15 750    5 190    10    41.9
2011    45 430    19 840    5 730    40    43.7
2012    51 620    25 860    5 000    70    50.1
2013    55 900    28 520    4 860    770    51.0
2014    68 610    36 760    4 330    750    53.6


Table 2    Comparison of methanol supply/demand in China  (kt)

Year    Supply amount    Export amount     Apparent consumption     Consumption growth (%)
2008    12 530    370    12 170    16.9%
2009    16 520    10    16 500    35.6%
2010    20 940    10    20 930    26.9%
2011    25 570    40    25 530    22.0%
2012    30 860    70    30 790    20.6%
2013    33 380    770    32 610    5.9%
2014    41 090    750    40 340    23.7%



Consumption

The consumption of methanol in China has increased steadily in recent years. The average annual growth of the methanol apparent consumption in China reached over 24% during 2004-2012. The growth of apparent consumption of methanol slowed somewhat in 2013, being only 6%. The apparent consumption of methanol in 2014 was over nine times that of 2003 (4.30 million tons). Consumption growth has declined constantly (see Table 2).
The apparent consumption of methanol in China reached 40.34 million tons in 2014, and consumption growth was close to 24%. The growth of apparent consumption increased somewhat in 2014. The main reasons include concentrated burst of methanol-to-olefin project completions and a considerable consequent increase of methanol consumption. The development of the methanol-to-aromatics/gasoline sector was also okay. The completion of units in Tangshan Realm Industry and Commerce Co., Ltd. and Inner Mongolia Fenghui Chemical Co., Ltd. also boosted the consumption of methanol to a certain extent. The traditional market was not smooth however. Formaldehyde, dimethyl ether and MTBE were all in surplus. The overall operating rate of formaldehyde producers in China was around 50%. The average operating rate of dimethyl ether producers was only around 20%. The acetic acid trade could yield satisfactory profits, and the average operating rate of acetic acid producers was over 60%.
The structure of methanol consumption in China is changing. The focus is gradually shifting from traditional sectors, such as the manufacture of formaldehyde or dimethyl ether, to making oil substitutes such as olefins and fuels. In 2014, the manufacture of new downstream products incorporating olefins that are made from methanol already constituted the biggest demand for methanol. Traditional consumption in making formaldehyde was second, and the manufacture of methanol fuel was third. The proportion of consumption for making dimethyl ether, another traditional downstream product, declined a little further. With the rapid development of coal-to-olefin, coal-to-aromatics and coal-to-ethylene glycol projects over the next few years, the proportion of methanol consumed in making new types of products will keep increasing.

Import and export

After the onset of the financial crisis in 2008, the demand for methanol in foreign markets was slack, and great quantities of methanol poured into China at low cost. Starting from 2009, the amount of methanol imported to China increased sharply to 5.00 million tons. The import volume reached an all-time peak of 5.73 million tons in 2011, and has hovered at 4.0-5.0 million tons a year since 2012. The main sources of imported methanol are Iran, Saudi Arabia, Malaysia, Qatar, Bahrain and Indonesia. Small amounts come from New Zealand, the United States, the Republic of Trinidad and Tobago.
China’s export of methanol fell off drastically during that period, then increased sharply in 2013 to 770 kt and reached 750 kt in 2014.

Table 3   Comparison of methanol import/supply in China, 2008-2014 (kt)

Year    Import amount     Supply amount
2008    1 430    12 530
2009    5 290    16 520
2010    5 190    20 940
2011    5 730    25 570
2012    5 000    30 860
2013    4 860    33 380
2014    4 330    41 090


Price

With the onset of the global financial crisis in 2008, the market price of methanol in China slid drastically in the second half of the year and hit bottom in 2009. The price of methanol has declined constantly since 2011, except in the second half of 2013 when the price increased to RMB4 180/t, owing to massive purchases made by new olefin enterprises and a concentrated overhaul of domestic methanol units. The market price of methanol slid again in 2014, dropping to RMB1 930/t in Jiangsu, the lowest level since January 2009.