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8/10/2019 09-Methanol Industry Outlook-Jason CheskoMay2014f
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METHANEX CORPORATION 2013
Jason Chesko, Senior Manager, Fuels
Methanex Corporation
May 2014
PROMSUS
Methanol Industry Outlook
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METHANEX CORPORATION 2014
Forward-looking Statements
Information contained in these materials or presented orally at this presentation,
either in prepared remarks or in response to questions, contains forward-looking
statements. Actual results could differ materially from those contemplated by the
forward-looking statements. For more information, we direct you to our 2013 MD&A
and our first quarter 2014 MD&A and the slide at the end of this presentation.
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METHANEX CORPORATION 2014
Methanex & MethanolIndustry
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METHANEX CORPORATION 2014
- Methanex- Methanol Industry
- Supply/Demand
- Pricing Environment
- Energy Applications- Methanol to Olefins
- DME
- Fuel Blending
- Marine Fuels
4
Overview
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2013 METHANEX CORPORATION
Methanex: Global Methanol Leader
~US$ 3 billion sales globally (2013)
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2013 METHANEX CORPORATION
Methanol Usage..
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By Derivative By Region
Source: Methanexas at Dec 31, 2013
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Methanol Production
Today, methanol is primarily
produced from natural gas andcoal (China)
Methanol is increasingly being produced from renewables
Long-term vision is more renewable/bio methanol (ie; for methanol inships, transportation fuels)
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Source: CRISource: CRI
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2013 Regional Production
NA: 1.9 MMT
LA: 7.5 MMT
EU: 8.4 MMT
AP: 28.9 MMT(China: 19 MMT)
Source: IHS August 2013.
ME: 12.8 MMT
2013 China Capacity(42 MMT)
Coal - 28 MMT
Nat Gas - 9 MMT
Coke Oven - 7 MMT
China estimated to operate at 45 50% rates
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Methanol projectannouncements in NorthAmerica due to lower naturalgas price environment
Methanex Projects -Louisiana
Other Restarts & New ProjectAnnouncements
Modest growth outlook inAtlantic Basin
North American Methanol Capacity Growth
Equipment in transit to Geismar, Louisiana
Methanex Geismar, Louisiana project site
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Global Methanol S&D Evolution: 2013 vs 2017
Net
27M
42M 53M
19M 21M
41M 59M
6M
6M
S&D S&D
1M
1M
2013 2017
Net
Atlantic
Supply
Demand
Pacific
Source: IHSDemand figures exclude integrated Methanol to Olefins
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0
50
100
150
200
250
300
350
400
450
500
0 10000 20000 30000 40000 50000 60000 70000
Delivered
cash
Cost
(USD/tonne)
Cumulative Capacity (000 tonnes / year)
Methanol Industry Cost Curve
11
Steep cost curve, set by China natural gas based production
China, Russia
Exports,
Germany, India,
E. Europe
Eq. Guinea,
Indonesia, Iran,Malaysia,
Methanex Plants,Oman,Qatar,Saudi,Trinidad(MHTL),Venezuela, USA
Source: MethanexAssumes $105/bbl Brent oil; RMB 640/MT coal (approx. US$105/tonne)
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Methanol Price Environment
Key Factors: Energy Prices/Cost Curve, Reinvestment
Economics (long-term)
12
Source:IHS Chemical April 2014
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2013 METHANEX CORPORATION
Methanol Demand
Formaldehyde Acetic AcidWood Industry, Pharmaceuticals, Automotive Fleece, Adhesives, Paints
Dimethyl Terephthalate Methyl ChlorideRecyclable plastic bottles Silicones
Energy & MTO
(40% of Demand; High Growth)Traditional Uses (60% of Demand)
Fuel Blending
Methanol is being used in an increasing number of
energy applications
MTOMethanol-to-Olefins
Marine Fuels
DME (di-methyl-ether)
MTBE
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2013 METHANEX CORPORATION
Methanol Industry Growth
Energy demand driving higher industry growth
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Source: IHS Chemical 2014 Update, April, 2014. Excludes integrated methanol demand for methanol to olefins and propylene
(000s tonnes)CAGR: 6.0%
CAGR: 8.1%
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
Chemical MTBE/TAME Fuel DME MTO/MTP (Merchant)
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METHANEX CORPORATION 2013
Methanol Energy/Fuel Applications Drivers
Lower cost than oil products
Clean-burning
Energy Security &Diversification
Low infrastructure costsHigh efficiency and
performance
Renewable methanol options
Source: IHS Chemical
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00
0
20
40
60
80
100
120
1990 1995 2000 2005 2010 2015
US$/
btu
US$/b
arrel
Crude Oil (WTI)
Natural Gas (HHub)
15
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2013 METHANEX CORPORATION
Methanol to Olefins (MTO)
China has commercialized MTO - an emerging oil product substitution opportunity
Two main pathways progressing Integrated olefins produced from directly from coal, methanol an intermediate step
Merchant (MTO) methanol purchased from external suppliers
China merchant capacity is developing rapidly 3 merchant plants operating (methanol demand ~3.3 mmtpa)
Ningbo Skyfords 1.8 MMT merchant methanol to 0.6 MMT olefins plant
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METHANEX CORPORATION 2013
Dimethyl Ether (DME)
Large DME - LPG Blending market in China
DME emerging as a transportation fuel Volvo commercializing DME for heavy trucks in North
America in 2015
Global ASTM Standard for DME Fuel issued
Many sites in the U.S. under evaluation for DME plants
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Economical
High Performance
Ultra-low Emissions (No
Soot or Particulate
Matter)
Low Infrastructure Costs
Easy to handle, store,
dispense
95% GHG reduction
potential (biomass)
Volvo DME Truck DME-LPG Blending
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METHANEX CORPORATION 2013
Methanol Fuel Blending in China
Xinjiang
Tibet
Qinghai
Gansu
ZhejiangHunan Jiangxi
GuangdongYunnan Hong Kong
Jiangsu
Sichuan
Shaanxi
Shanxi
Guizhou
Fujian
Macau
Shanghai
Hainan
Ningxia
M15, M30& M50
M15, M25
M45
M10Chongqing
Shandong
Anhui
Jilin
Guangxi
Henan
Hubei
Heilongjiang
Tianjin
M5, M15, M85 & M100
Hebei
BeijingInner
Mongolia
Liaoning
M15
M15,M30
M15
M15,M30
M15
M15 China is successfully commercializing
methanol fuels
Example: M15 = 15% methanol, 85% gasolineSource: Methanex, China PDRCs, Shanxi Methanol office
M15
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METHANEX CORPORATION 2010
Methanol Fuel Blending Activity
Egypt
China
Commercial / near-commercial
Assessment stage
Australia
Israel
New Zealand
Trinidad &Tobago
U.K.
Netherlands
Denmark
Iran
Uzbekistan
Significant methanol fuel blending activity developing outside China
Turkmenistan
Iceland
Switzerland
Azerbaijan
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Alaska
Vietnam
Russia
U.S.
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METHANEX CORPORATION 2013
Methanol as a Marine Fuel
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M th l M i F l
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METHANEX CORPORATION 2013
Methanol as a Marine Fuel Regulations Driving Change
Regulations driving change
Emission Control Areas (ECA) 2015 near term focus
In 2020, IMO targeting all marine fuels globally to be 0.5%sulphur
Global Emission Control Areas (ECAs)
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METHANEX CORPORATION 2013
Marine Fuels - Alternatives
Alternatives for meeting SECA guidelines
HFO (Heavy fuel oil) with scrubbers
Marine Diesel Oil (MDO) / Marine Gas Oil (MGO)
Alternative fuels: LNG, Methanol / DME
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METHANEX CORPORATION 2013
Marine Fuels Economics
Historically, methanol has been more economical than Marine Gas
Oil
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Energy Price Comparison | MGO vs Methanol (mmbtu basis, LHV)
* Calcula ted a s the average of Si ngapore 0.5% MGO, San Francis co 0.5% MGO, and Rotterdam MDO pricing (LQM)
when data is avail able . Source: Bloomberg & LQM
^ Simpl e a verage o f NE China Spot, USGC Spot, and Ro tterdam T2 Spot prices from CMAI.
10.0
12.0
14.0
16.0
18.0
20.0
22.0
24.0
2008 2009 2010 2011 2012 2013
$/mmbtu
MGO Price * Global Avg. Methanol Price
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METHANEX CORPORATION 2013
Methanol as a Marine Fuel Commercial Developments
SPIRETH Project technology confirmation
Engine manufacturers developing methanol compatible engines
MAN 2 stroke engines
Wartsila 4 stroke engines
Standards and regulations under development
Risk Classification Societies DNV, Lloyds Register
Marine fuels regulations being updated for methanol
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METHANEX CORPORATION 2013
Methanol as a Marine Fuel Commercial Developments
Stena
Methanex (Waterfront Shipping) taking delivery of seven newmethanol ships in 2016 (MANs ME-LGI flex fuel engine)
Significant interest developing in Europe, North America & Asia
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METHANEX CORPORATION 2013
Thank You.
Q & A
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METHANEX CORPORATION 2014
FORWARD-LOOKING INFORMATION WARNING
This Presentation contains forward-looking statements with respect to us and our industry. These statements relate to future events or our future performance. All statements other thanstatements of historical fact are forward-looking statements. Statements that include the words believes, expects, may, will, should, potential, estimates, anticipates,aim, goal or other comparable terminology and similar statements of a future or forward-looking nature identify forward-looking statements.
More particularly and without limitation, any statements regarding the following are forward-looking statements: expected demand for methanol and its derivatives, expected newmethanol supply or restart of idled capacity and t iming for start-up of the same, expected shutdowns (either temporary or permanent) or restarts of existing methanol supply (includingour own facilities), including, without limitation, the timing and length of planned maintenance outages, expected methanol and energy prices, expected levels of methanol purchasesfrom traders or other third parties, expected levels, timing and availability of economically priced natural gas supply to ea ch of our plants, capital committed by third parties towardsfuture natural gas exploration and development in the vicinity of our plants, our expected capital expenditures, including, without limitation, those to support natural gas exploration anddevelopment for our plants, anticipated operating rates of our plants, expected operating costs, including natural gas feedstock costs and logistics costs, expected tax rates or resolutionsto tax disputes, expected cash flows, earnings capability and share price, availability of committed credit facilities and other financing, ability to meet covenants or obtain waiversassociated with our long-term debt obligations, including, without limitation, the Egypt limited recourse debt facilities that have conditions associated with upstream natural gasdevelopment and the finalization of certain land title registration and related mortgages that require action by Egyptian governmental entities, our shareholder distribution strategy andanticipated distributions to shareholders, commercial viability and timing of, or our ability to execute, future projects, plant restarts, capacity expansions, plant relocations, or otherbusiness initiatives or opportunities, including the planned relocation of idle Chile methanol plants to Geismar, Louisiana(Geismar), our financial strength and ability to meet futurefinancial commitments, expected global or regional economic activity (including industrial production levels), expected outcomes of litigation or other disputes, claims and assessments,expected actions of governments, government agencies, gas suppliers, courts, tribunals or other third parties, and expected impact on our operations in Egypt or our financial condition asa consequence of civil unrest or actions taken or inaction by the Government of Egypt and its agencies.
We believe that we have a reasonable basis for making such forward-looking statements. The forward-looking statements in this document are based on our experience, our perception oftrends, current conditions and expected future developments as well as other factors. Certain material factors or assumptions were applied in drawing the conclusions or making theforecasts or projections that are included in these forward-looking statements, including, without limitation, future expectations and assumptions concerning the following: the supply of,demand for, and price of methanol, methanol derivatives, natural gas, coal, oil and oil derivat ives, the success of our natural gas exploration and development in Chile, our ability toprocure natural gas feedstock on commercially acceptable terms, operating rates of our facilities, receipt of remaining required permits in connection with our Geismar projects, receiptor issuance of third-party consents or approvals, including, without limitation, governmental registrations of land title and related mortgages in Egypt, governmental approvals related tonatural gas exploration rights or rights to purchase natural gas, the establishment of new fuel standards, operating costs including natural gas feedstock and logistics costs, capital costs,tax rates, cash flows, foreign exchange rates and interest rates, the availability of committed credit facilities and other financing, timing of completion and cost of our Geismar projects,global and regional economic activity (including industrial production levels), absence of a material negative impact from major natural disasters, absence of a material negative impactfrom changes in laws or regulations, absence of a material negative impact from political instability in the countries in which we operate, enforcement of contractual arrangements andability to perform contractual obligations by customers, natural gas and other suppliers and other third parties, and satisfaction of conditions precedent contained in the Geismar 1natural gas supply agreement.
However, forward-looking statements, by their nature, involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-lookingstatements. The risks and uncertainties primarily include those attendant with producing and marketing methanol and successfu lly carrying out major capital expenditure projects in
various jurisdictions, including, without limitation: conditions in the methanol and other industries including fluctuations in the supply, demand for and price of methanol and itsderivatives, including demand for methanol for energy uses, the price of natural gas, coal, oil and oil derivatives, the success of natural gas exploration and development activities insouthern Chile, our ability to obtain natural gas feedstock on commercially acceptable terms to underpin current operations and future production growth opportunities, the ability tosuccessfully carry out corporate initiatives and strategies, actions of competitors, suppliers and financial institutions, conditions within the natural gas delivery systems that may preventdelivery of our natural gas supply requirements, our ability to meet timeline and budget targets for our Geismar projects, including cost pressures arising from labour costs, competingdemand for natural gas, especially with respect to domestic needs for gas and electricity in Chile and Egypt, actions of governments and governmental authorities, including, withoutlimitation, the implementation of policies or other measures that could impact the supply of or demand for methanol or its de rivatives, changes in laws or regulations, import or exportrestrictions, anti-dumping measures, increases in duties, taxes and government royalties, and other actions by governments that may adversely affect our operations or existingcontractual arrangements, world-wide economic conditions, satisfaction of conditions precedent contained in the Geismar 1 natural gas supply agreement, and other risks described in our2013 Managements Discussion and Analysis and our First Quarter 2014 Managements Discussion and Analysis .
Having in mind these and other factors, investors and other readers are cautioned not to place undue reliance on forward-looking statements. They are not a substitute for the exercise ofones own due diligence and judgment. The outcomes anticipated in forward-looking statements may not occur and we do not undertake to update forward-looking statements except asrequired by applicable securities laws.
Forward-looking Statements
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METHANEX CORPORATION 2014
Backup Slides
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METHANEX CORPORATION 2010
Methanol Fuel Blending Europe
3% methanol blending in European fuel specifications
Netherlands & UK already blending methanol
Switzerland & Iceland close to commercializing
Government support for methanol fuels in Iceland, UK
Methanol fuels an official fuel at World Rally Championship
Methanol Fuel Cell / Electric Vehicle Project in Denmark
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METHANEX CORPORATION 2013
Methanol Fuel Blending United States
Momentum developing for methanol
fuels in the U.S. Shale Gas
Fuel Freedom Foundation
US Energy Security Council
Open Fuel Standard
Joint Alcohol Fuel Alliance
Dr. Ernest Moniz, U.S. Secretary ofEnergy and co-author of MIT studyrecommending Methanol Fuels
MIT Study - The U.S. governmentshould implement an open fuel
standard that requires automobile
manufacturers to provide tri-flex-
fuel operation in light-duty
vehicles.
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METHANEX CORPORATION 2013
Australia Methanol Fuel Blending
Methanol Fuels being commercialized in Australia
Project led by Coogee. Methanex is a partner Path to energy security
Methanol excise tax free status for 10 years (~A38c/litre,~$US 480/t)
Successful road tests completed
Testing program near completion (Orbital Corp.). Positiveresults
Commercial roll out of GEM8 and GEM56 in 2014;GEM15 in the future
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METHANEX CORPORATION 2013
Israel Methanol Fuel Blending
Large gas finds in Israel & Strategic
need to reduce oil dependence Methanol program carried out by Dor
Chemicals and supervised bygovernmental steering committee
M15 Initial Focus
M15 demonstrations completed (13vehicles, 800,000 km, 2 years)
M15 testing being expanded to morevehicle types
Working on M15 Standard
M70 testing program validate highmethanol blends in FFVs
Targeting commercial introduction ofmethanol fuels over next couple ofyears
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Source: Alternative Fuels Initiative, Prime Minister's Office, Israel
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DME Global Activity
Indonesia800 ktpy planned
China11 mtpy capacity3050% in operation
India265 ktpyplanned
SwedenWorlds firstBioDME plant(2011)
Uzbekistan10 ktpy planned
VietnamProjectannounced
United States &Canada
Volvo CommercializingDME as a transportationfuel in 2015
Papua NewGuinea200 ktpy planned(2016)
Japan
80 ktpyoperational
Trinidad & Tobago100 KTA plant planned
Mitsubishi Corp. &Mitsubishi Gas Chemical
Egypt200 ktpyplanned
Israel50 ktpyplanned
LPG blending (current market) and as a diesel replacement (emerging market)
Source: International DME Association, IHS Chemical
California4 ktpyoperational
Commercial / near-commercial
Assessment stage
VietnamProjectannounced
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