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Methanol and DME - Key Petrochemicals For Tomorrow's World
Prepared For:
2011 Japan DME Forum
By: Leo Wirawan
Methanol Market Services Asia Manhattan House, 151 Chin Swee Road
# 09-07 - Singapore 169876 Phone: +65 6465 2720
E-mail: [email protected]
Jim Jordan & Associates 12941 North Freeway Suite 226, Houston, Texas 77008, USA Tel: 281-877-7009 E-mail: [email protected]
MMSA (in Partnership with JJ&A) “Global Insight, Asian Perspective™”
• Strong, Multi Faceted Partnership between MMSA and JJ&A
• Multi-Client Services
– Methanol & Derivative Analysis – 2011 MDA Available Now
• Methanol, Acetic Acid, Formaldehyde, MMA in global detail
– Methanol Notes™
• Topics of relevance in brief 5X/month
– JJ&A Weekly Methanol & Fuels Reports
– China Monthly Methanol Analysis
• Project Services
– Market and Technical Due Diligence Support • Including derivatives: eg. Methanol-to-Olefins (MTO), DME, many others
– Bankable Project Assessments
– Valuation
– Many others
• IMPCA Asian Methanol Conference Co-organizer – 14th : November 2011 => Conference Proceedings Available – 15th : November 2012 => Details to be provided
• Petrochemical Training
– Tools to analyze values in Petrochemical industry
September-October 2011 © MMSA Pte. Ltd.
Today’s Agenda
• Global, Asian Methanol Markets - History and Outlook
• Methanol Demand by Derivative – Special Focus: DME contribution to growth in China, and "hidden" DME
demand in processes like MTO, MTP, and MTG
• Methanol Supply by Region
• Methanol Trade
• Methanol Pricing – Special Focus: DME's role as a price ceiling in China and ramifications
for the rest of the world
• MMSA View of Key Success Factors for Future DME Growth
September-October 2011 © MMSA Pte. Ltd.
Today’s Agenda
• Global, Asian Methanol Markets - History and Outlook
• Methanol Demand by Derivative – Special Focus: DME contribution to growth in China, and "hidden" DME
demand in processes like MTO, MTP, and MTG
• Methanol Supply by Region
• Methanol Trade
• Methanol Pricing – Special Focus: DME's role as a price ceiling in China and ramifications
for the rest of the world
• MMSA View of Key Success Factors for Future DME Growth
September-October 2011 © MMSA Pte. Ltd.
Global Methanol Balance Appears to be in the “Long Position” at First Glance
September-October 2011 © MMSA Pte. Ltd.
60%
65%
70%
75%
80%
85%
90%
95%
100%
-
20,000
40,000
60,000
80,000
100,000
120,000
2006 2007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E 2016E
Th
ou
san
d T
on
nes
Methanol Supply and Demand - World4Q11 Update
Total Demand Production
Production Capacity (Actual) Production Capacity (Adjusted)
Op Rates (Based on Adj Capacity - Right Axis)
ForecastCAUTION: Significant “Phantom Capacities”
Exist
Asia, China Has Become an Important Part of the Global Methanol Market
September-October 2011 © MMSA Pte. Ltd.
0%
25%
50%
75%
100%
2010 2016E
Percentage of Methanol Use -Asia vs. Rest of the World
Rest of the World Asia
Today’s Agenda
• Global, Asian Methanol Markets - History and Outlook
• Methanol Demand by Derivative – Special Focus: DME contribution to growth in China, and "hidden" DME
demand in processes like MTO, MTP, and MTG
• Methanol Supply by Region
• Methanol Trade
• Methanol Pricing – Special Focus: DME's role as a price ceiling in China and ramifications
for the rest of the world
• MMSA View of Key Success Factors for Future DME Growth
September-October 2011 © MMSA Pte. Ltd.
Methanol Demand Growth Remains Robust–With Asia is in the Driver’s Seat
September-October 2011 © MMSA Pte. Ltd.
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2006 2007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E 2016E
Methanol Demand By Derivative - WorldOthers
Methanol-to-Olefins
Fuel Cells
DME
Biodiesel
Gasoline Blending & Combustion
Methyl Chloride (Chloromethane)
Methylamines
Methanethiol (Methyl Mercaptan)
Dimethyl terephthalate (DMT)
Methyl Methacrylate
Methyl tert-Butyl Ether (MTBE)
Acetic Acid
Formaldehyde
Methanol Use - ChinaBy Derivative
Formaldehyde Acetic Acid Methyl tert-Butyl Ether (MTBE)
Methyl Methacrylate Dimethyl terephthalate (DMT) Methanethiol (Methyl Mercaptan)
Methylamines Methyl Chloride (Chloromethane) Gasoline Blending & Combustion
Biodiesel DME Fuel Cells
Methanol-to-Olefins Others
2016E33.88
million metrictons
201020.74
million metric tons
China MeOH Demand from BOTH Traditional and Alternative Energy (still) Expected to Grow Significantly in the Next Few Years
September-October 2011 © MMSA Pte. Ltd.
% MeOH as Energy in (incl. MTBE)
2016E
Asia 38
China 49
MTO/MTP Process Gaining More Interests – Both for Integrated and Non-Integrated Plants
Shenhua Baotou MeOH: 1800 ktpa
Ethylene / Propylene: 600 ktpa
Datang Duolun MeOH: 1670 ktpa
Propylene: 490 ktpa
Shenhua Ningxia MeOH: 1670 ktpa
Propylene: 490 ktpa
• Three integrated, coal-based MTO Projects in China have been commissioned recently, after some delays
• One non-integrated MTO project has
been started up – relatively small
MTO size
• Significant numbers are “still on the drawing board”
• Concerns on the overcapacity in the coal-to-chemicals sector remain, but support for “high value” applications continues (includes value of self-sufficiency)
• Interest in Methanol-to-Gasoline (MTG) has been noted, but with slower progress
Zhongyuan Petrochemical Sinopec Group
(Non-Integrated) Ethylene / Propylene: 200 ktpa
November 2011 © MMSA. All Rights Reserved.
Still Expanding Methanol Capacity, but Thinning Down Towards the End of Forecast
September 2010 © MMSA Pte. Ltd. and JJ&A
CAUTION: Significant “Phantom Capacities”
Exist
-
10,000
20,000
30,000
40,000
50,000
60,000
2006 2007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E 2016E
-000-
ton
nes
Supply Capacity for Methanol by Region 2006 - 2016E
Asia North America South America Europe Rest of World Middle East
World Methanol Trade Alive and Well, Connecting Producers and Consumers
September-October 2011 © MMSA Pte. Ltd.
2008, 2009, 2010 Methanol Trade Flow(Bubble Size Proportional to Capacity to Produce Methanol)
* Americas Supply * Persian Gulf Supply * Other Supply
2, 2, 56
4,226, 4,065,
4,361
516, 400, 384
318, 477,
513
571, 307,
381
205, 68,
38
1,786, 1,376,
1,146
1,253, 933, 1,107
3,977, 6,299, 7,153
466, 722,
752
315, 402,
191
From
North
America
165, 28, 58
201, 10,
7
636, 647,
1,033
To
Northeast
Asia
From
Chile
Canada
Chile
Trinidad
&
Venezuela Equatorial
Guinea
China
Middle
EastLibya
Russia
Southeast
Asia
New
Zealand
171, 21, 38
1,711, 1,027,
1,486
765, 973,
1,257
3, 252,
9
34, 47,
0
1,147, 1,599,
1,047
Trade ME – Asia Can Be Expected to Grow Even More, Other Exporters are Looking for
Opportunities As Well
September 2010 © MMSA Pte. Ltd. and JJ&A
-15,000
-10,000
-5,000
0
5,000
10,000
15,000
2006 2007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E 2016E
-000-
ton
nes
Net Methanol Trade by Region2006- 2016E
Asia North America South America Europe Russia Middle East Africa
Today’s Agenda
• Global, Asian Methanol Markets - History and Outlook
• Methanol Demand by Derivative – Special Focus: DME contribution to growth in China, and "hidden" DME
demand in processes like MTO, MTP, and MTG
• Methanol Supply by Region
• Methanol Trade
• Methanol Pricing – Special Focus: DME's role as a price ceiling in China and ramifications
for the rest of the world
• MMSA View of Key Success Factors for Future DME Growth
September-October 2011 © MMSA Pte. Ltd.
Cash Cost Curve: Important Tool for Competitive Situation Analysis
September-October 2011 © MMSA Pte. Ltd.
US
D p
er
me
tric
to
n
Cumulative Available Capacity*
MeOH Delivered Cash Cost (Using Sep-11 Data), Coastal China Main Ports, 2011 Net Avail. Capacity
High(est) cost Domestic China Coal-Based Methanol Production
Low(est) cost NG Based Imports
General Principle: Methanol Prices Bounded By Costs, Affordability
• Costs of Production in China all important as it forms the “Floor” for methanol prices.
– Largely tied to coal costs
• Price Increases Limited to Ability of Derivatives to Pay (“Affordability” or “Ceiling”)
September-October 2011 © MMSA Pte. Ltd.
Coal Prices in China Following Crude, with Less Volatility, Lifting Methanol Cost Floor
September-October 2011 © MMSA Pte. Ltd.
0
10
20
30
40
50
60
70
80
0
20
40
60
80
100
120
140
160
US
D p
er M
MB
tu
US
D p
er
ton
or
per
bb
l
Premium Coal vs. Crude Oil (Price Comparison - Thru September 2011)
Crude Oil, Dubai, USD/bbl
Coal, Datong Premium Mix, FOB QHD Port
Crude Oil, Dubai, USDMMBtu
Coal, Datong Premium Mix, FOB QHD Port, USD/MMBtu
Natural Gas, NYMEX-Henry Hub
Methanol Price Ceiling in China is Strong – Demand Improvement Will Gradually Ease the Situation
(From: China Methanol Monthly Analysis)
September-October 2011 © MMSA Pte. Ltd.
0
500
1000
1500
2000
2500
0 5500 11000 16500 22000
Me
tha
no
l "A
ffo
rda
bilit
y,"
US
D/M
T
Cumulative Consumption of MeOH in China, 2011E (Sep-11 Update),-000- tons, Select
Methanol Volume vs. Value - ChinaMid to Late September'11
AAFormaldehyde
MTBE
Methyl-
amines
MMA DME
Average Price for East China, Ex-Tank,Average Sep-11; 1 USD = 6.38 CNY
Chloro-
methaneGasoline
Blending(equal energy)
Average Price for East China, Ex-Tank,Average Aug-11; 1 USD = 6.39 CNY
Methanol Affordability for DME Producers Affected by Methanol – LPG Spread
September 2010 © MMSA Pte. Ltd. and JJ&A
0
300
600
900
1,200
1,500
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Sau
di A
ram
co
Co
ntra
ct P
rice (U
SD
/ metric
ton
)
Ch
ina D
om
esti
c L
PG
, DM
E, a
nd
Meth
an
ol
Pri
ces (C
NY
/metr
ic to
n)
LPG, DME, and Methanol Weekly Average Prices - South China (Assessment by MMSA and JJ&A)
LPG Prices - Guangdong Province, South China - EXW
DME Price - Guangdong province, South China - EXW
Methanol Prices - South China - Ex-tank
Simple DME CC Est
Saudi Aramco CP (50% Propane : 50% Butane) - FOB Saudi Arabia
Viability of MTO vs. Olefins Steam Cracking – MTO Economics Have Improved Recently
(From MeOH Notes™)
September 2010 © MMSA Pte. Ltd. and JJ&A
-2000
-1500
-1000
-500
0
500
1000
1500
2000
2500
3000
Ja
n-0
0M
ay-0
0S
ep
-00
Ja
n-0
1M
ay-0
1S
ep
-01
Ja
n-0
2M
ay-0
2S
ep
-02
Ja
n-0
3M
ay-0
3S
ep
-03
Ja
n-0
4M
ay-0
4S
ep
-04
Ja
n-0
5M
ay-0
5S
ep
-05
Ja
n-0
6M
ay-0
6S
ep
-06
Ja
n-0
7M
ay-0
7S
ep
-07
Ja
n-0
8M
ay-0
8S
ep
-08
Ja
n-0
9M
ay-0
9S
ep
-09
Ja
n-1
0M
ay-1
0S
ep
-10
Ja
n-1
1M
ay-1
1S
ep
-11
US
D/t
on
ne
Ethylene Cash Cost vs. Feed Type Hypothetical Asia, 1.75 tonnes propylene/tonne ethylene
CC via meOH CC via Naphtha CCmeOH-CCNaphtha
Prices Should Return to Marginal China Economics – Baring any Unforeseen Circumstances
September 2010 © MMSA Pte. Ltd. and JJ&A
0
100
200
300
400
500
600
700
800
900J
an
-01
Ap
r-0
1J
ul-
01
Oc
t-0
1J
an
-02
Ap
r-0
2J
ul-
02
Oc
t-0
2J
an
-03
Ap
r-0
3J
ul-
03
Oc
t-0
3J
an
-04
Ap
r-0
4J
ul-
04
Oc
t-0
4J
an
-05
Ap
r-0
5J
ul-
05
Oc
t-0
5J
an
-06
Ap
r-0
6J
ul-
06
Oc
t-0
6J
an
-07
Ap
r-0
7J
ul-
07
Oc
t-0
7J
an
-08
Ap
r-0
8J
ul-
08
Oc
t-0
8J
an
-09
Ap
r-0
9J
ul-
09
Oc
t-0
9J
an
-10
Ap
r-1
0J
ul-
10
Oc
t-1
0J
an
-11
Ap
r-11
Ju
l-11
Oc
t-11
Ja
n-1
2A
pr-
12
Ju
l-1
2O
ct-
12
US
Do
llars
per
metr
ic t
on
Global Methanol Pricing
Delivered Cost Parity Imports to China
Methanol China Spot, Avg. CFR China Main Ports USD/metric ton
Methanol US Contract (JJ&A Index), Avg Realized Price FOB USGC USD/metric ton
Methanol West Europe Contract (T2), Avg Realized Price FOB Rotterdam USD/metric ton
Forecast
Today’s Agenda
• Global, Asian Methanol Markets - History and Outlook
• Methanol Demand by Derivative – Special Focus: DME contribution to growth in China, and "hidden" DME
demand in processes like MTO, MTP, and MTG
• Methanol Supply by Region
• Methanol Trade
• Methanol Pricing – Special Focus: DME's role as a price ceiling in China and ramifications
for the rest of the world
• MMSA View of Key Success Factors for Future DME Growth
September-October 2011 © MMSA Pte. Ltd.
Key Success Factors – DME Growth
• Backward and/or forward integration will likely favor the DME economics, especially long term
– Eliminate the “sandwiched in between” effect
• Determine the best DME supply proposition, esp. considering feedstock availability and applications
Example from China:
– “Cheap” natural gas could be made available, especially at the remote location, quite far from China
– “Expensive” coal could be made available, especially within China’s inland provinces
• Government regulatory and supports is crucial, especially to move from the current “status quo”
November 2009 © MMSA. All Rights Reserved.
Key Success Factors – DME Growth
• Future Demand Growth of DME: – In China, developmental applications of DME (esp. for Transportation
Fuel and Power Generation) hold important future to “revive” the growth momentum of DME usage in China
– Outside of China, DME can be positioned as an important tool to support energy independency
• Example: DME as an Important Tool to Support Kerosene to LPG Conversion Programme in Indonesia
– “Implied” DME growth into MTO, MTP, and MTG can also be expected
• MMSA/JJ&A is able to provide advisory services to assist in properly planning for DME, Methanol, or Other Petrochemical Projects
November 2009 © MMSA. All Rights Reserved.
Global Insight, Asian Perspective™