IS METHANOL
HEADING TOWARDS
OVERSUPPLY?
MAHUA
CHAKRAVARTYPETROCHEMICAL MARKETS
EDITOR
ARGUS
Petrochemicals, also called petroleum distillates, are chemical products derived from petroleum. Some chemical
compounds made from petroleum are also obtained from other fossil fuels, such as coal or natural gas, or renewable
sources such as corn or sugar cane.
Petrochemicals, also called petroleum distillates, are chemical products derived from petroleum. Some chemical
compounds made from petroleum are also obtained from other fossil fuels, such as coal or natural gas, or renewable
sources such as corn or sugar cane.
Petrochemicals, also called petroleum distillates, are chemical products derived from petroleum. Some chemical
compounds made from petroleum are also obtained from other fossil fuels, such as coal or natural gas, or renewable
sources such as corn or sugar cane.
Petrochemicals, also called petroleum distillates, are chemical products derived from petroleum. Some chemical
compounds made from petroleum are also obtained from other fossil fuels, such as coal or natural gas, or renewable
sources such as corn or sugar cane.
London
Houston
Singapore
Moscow
Dubai
New York
Portland
Calgary
Santiago
Bogota
Rio de Janeiro
Beijing
Shanghai
Tokyo
Sydney
Astana
Kiev
Cape Town
Riga
San Francisco
Washington
Market Reporting
Consulting
Events
Is methanol heading towards oversupply?Kuala Lumpur, Malaysia
Mahua Chakravarty21 August 2018
Market Reporting
Consulting
Events
Agenda
• Global methanol market & changes• What’s happening in Asia• China MTOs & an update• A quick look at SEA & India• Conclusion
Copyright © 2016 Argus Media group. All rights reserved.
A global demand-supply snapshot
North America Production: 6 milConsumption: 7.5 mil
South AmericaProduction: 7.8 milConsumption: 2.1 mil
Western EuropeProduction: 2.8 milConsumption: 7.6 mil
Central EuropeProduction: 379 tConsumption: 1.2 mil
AfricaProduction: 2.4 milConsumption: 290 t
Russia and Central Asia Production: 4.2 milConsumption: 2.5 mil
Northeast AsiaProduction: 49.6 milConsumption: 62.5 mil
Middle EastProduction: 13.7 milConsumption: 2.9 mil
Southeast AsiaProduction: 3.2 milConsumption: 2.9 mil
South AsiaProduction: 290 tConsumption: 2.1 mil
Copyright © 2016 Argus Media group. All rights reserved.
Global methanol prices 2013-18
0.00
100.00
200.00
300.00
400.00
500.00
600.00
700.000
1-J
an-2
01
3
01
-Mar
-20
13
01
-May
-20
13
01
-Ju
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01
3
01
-Se
p-2
01
3
01
-No
v-2
01
3
01
-Jan
-20
14
01
-Mar
-20
14
01
-May
-20
14
01
-Ju
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01
4
01
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p-2
01
4
01
-No
v-2
01
4
01
-Jan
-20
15
01
-Mar
-20
15
01
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-20
15
01
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01
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01
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-No
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01
5
01
-Jan
-20
16
01
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-20
16
01
-May
-20
16
01
-Ju
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01
6
01
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p-2
01
6
01
-No
v-2
01
6
01
-Jan
-20
17
01
-Mar
-20
17
01
-May
-20
17
01
-Ju
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01
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01
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-Jan
-20
18
01
-Mar
-20
18
01
-May
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18
01
-Ju
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01
8
CFR China FOB USG Contract FOB Rotterdam
High volatility seen with prices jumping about 50% of value
Copyright © 2016 Argus Media group. All rights reserved.
Global methanol demand growth outlook
43%
16%
12%
5%
15%
9%
Demand growth by sector- 2017
Traditional downstream Captive MTO/MTP Merchant MTO/MTP
Biodiesel Fuel Applications All Other
Copyright © 2016 Argus Media group. All rights reserved.
Global methanol demand by sector and region
Copyright © 2016 Argus Media group. All rights reserved.
Global methanol capacity versus demand growth
• Cumulative capacity growth has outpaced demand
• In 2017 an est 17. mil tonnesof cumulative growth contribution came from MTOs
• By 2021, 15 mil tonnes of cumulative growth will come from MTOs
• Iran is expected to add more than 4 mil tonnes of capacity
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
2013 2014 2015 2016 2017 2018 2019 2020
Global methanol capacity 2013-20
Non MTO Production Capacity Captive MTO/MTP Methanol
Copyright © 2016 Argus Media group. All rights reserved.
Global methanol demand by production & region
Copyright © 2016 Argus Media group. All rights reserved.
Global methanol demand & trade flows by region
Market Reporting
Consulting
Events
Agenda
• Global methanol market & changes• What’s happening in Asia• China MTOs & an update• A quick look at SEA & India• Conclusion
Copyright © 2016 Argus Media group. All rights reserved.
A demand-supply snapshot of Asia
IndiaProduction: 375 tConsumption: 2 mil
ChinaProduction: 49.6 mil Consumption: 57.7 mil
South KoreaProduction: 0Consumption: 1.7 mil
JapanProduction: 0Consumption: 1.7 mil
TaiwanProduction: 0Consumption: 1.7 mil
Southeast AsiaProduction: 3.2 milConsumption: 2.9 mil
Middle EastProduction: 13.7 milConsumption: 2.98 mil
Copyright © 2016 Argus Media group. All rights reserved.
Asia methanol prices 2013-18
0.00
100.00
200.00
300.00
400.00
500.00
600.00
700.00
01
-Jan
-20
13
01
-Mar
-20
13
01
-May
-20
13
01
-Ju
l-2
01
3
01
-Se
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3
01
-Jan
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14
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-Mar
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-May
-20
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-Ju
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4
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-Jan
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15
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-Mar
-20
15
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-May
-20
15
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01
-Jan
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16
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-Mar
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-May
-20
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01
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01
-Jan
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17
01
-Mar
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-Jan
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-Mar
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-May
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CFR China CFR WC India CFR SE Asia
Volatility in Chinese prices seen with more active trading of futures in China.
• Middle East, with Iran and Saudi Arabia dominating with volumes
• Potential incremental volumes from Iran impose threat of higher supply
• But repeated production issues in Ar Razi and Zagros also impacted the overall volumes
Copyright © 2016 Argus Media group. All rights reserved.
Middle East dominates global exports
13%
30%
39%
18%
0%
Exports by region- 2017
Asia Europe Middle East & Africa Americas Australiasia
• Iran remains as the largest exporter to Asia, accounting for 50%
• Malaysia’s shares rise with stable production in Labuan
• US steps in with the start of new units since 2015-16
Copyright © 2016 Argus Media group. All rights reserved.
Iran leads global exports to Asia
0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
8000000
9000000
10000000
2012 2013 2014 2015 2016 2017
Key regional exporters 2012-17
Iran Malaysia United States Venezuela
Indonesia China Singapore
Copyright © 2016 Argus Media group. All rights reserved.
Asia imports jump from 2015 on MTO growth
0 5000000 10000000 15000000 20000000
2012
2013
2014
2015
2016
2017
Imports by regions 2012-17
Middle East & Africa Americas Europe Asia
• Asia accounts for more than 50% of total global imports with China making up half of this
• In 2012, Asia made up 43% of global imports
• US imports have declined since 2015 on start ups
Copyright © 2016 Argus Media group. All rights reserved.
Asia methanol imports up with China & India
0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
16000000
18000000
2012 2013 2014 2015 2016 2017
Asia methanol imports 2012-17
China Thailand Japan South Korea India
Singapore Malaysia Indonesia Philippines
• Asia imported est. 19 mil tonnes in 2017, a 50pc jump from 2012
• China accounts for nearly 45% of total imports in Asia
• MTO capacity growth the key factor pushing imports
Market Reporting
Consulting
Events
Agenda
• Global methanol market & changes• What’s happening in Asia• China MTOs & an update• A quick look at SEA & India• Conclusion
Copyright © 2016 Argus Media group. All rights reserved.
Need for more olefins continue to push more MTOs to start
Copyright © 2016 Argus Media group. All rights reserved.
CTO start-ups to pick up pace till 2021
Copyright © 2016 Argus Media group. All rights reserved.
Olefins production margins from different processes
-1000.0
-800.0
-600.0
-400.0
-200.0
0.0
200.0
400.0
600.0
800.0
1000.0
Merchant methanol MTOmargins
CTO margins Naphtha cracker cash margins Ethane cracker cash margins PDH Cash margins
2016 2017 Jan-Aug 18
Copyright © 2016 Argus Media group. All rights reserved.
MTO margins come under pressure in 2017-18
-3000.0
-2500.0
-2000.0
-1500.0
-1000.0
-500.0
0.0
500.0
1000.0
1500.0
2000.0
2500.0
0
200
400
600
800
1000
1200
1400
1600
8-J
an-1
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8-F
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-16
8-M
ar-1
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8-A
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8-M
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6
8-J
un
-16
8-J
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8-A
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8-S
ep
-16
8-O
ct-1
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8-N
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8-D
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6
8-J
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8-F
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-17
8-M
ar-1
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8-A
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8-M
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8-J
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8-J
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8-A
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8-S
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8-O
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8-N
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8-F
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8-A
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8-M
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8-J
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8-A
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MTO margins versus prices
Merchant methanol MTO margins East China ex-tank $/t equivalent Ethyle ne cfr NE Asia Propylene cfr NE Asia
Market Reporting
Consulting
Events
Agenda
• Global methanol market & changes• What’s happening in Asia• China MTOs & an update• A quick look at SEA & India• Conclusion
Copyright © 2016 Argus Media group. All rights reserved.
A demand-supply snapshot of southeast Asia
IndonesiaProduction: 660 ktConsumption: 650 kt
MalaysiaProduction: 2 milConsumption: 720 kt
SingaporeProduction: -Consumption: 578 kt
ThailandProduction: -Consumption: 700 kt
VietnamProduction: -Consumption: 160 kt
BruneiProduction: 850 ktConsumption: 3 kt
PhilippinesProduction: -Consumption: 161 kt
Southeast AsiaTotal capacity: 4 mil Total Production: 3.2 milConsumption: 2.9 mil
Copyright © 2016 Argus Media group. All rights reserved.
China-SEA spread stays negative mostly
-10.00
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
0.00
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500.00
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700.00
01
-Jan
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13
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-Ju
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-Jan
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-Mar
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-Jan
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-Mar
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-Jan
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-Mar
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-May
-20
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-Ju
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China-SEA spread 2013-18
China-SE Asia spread CFR China CFR SE Asia
Copyright © 2016 Argus Media group. All rights reserved.
SEA imports increase with regional demand growth
0
500000
1000000
1500000
2000000
2500000
3000000
2012 2013 2014 2015 2016 2017
Southeast methanol imports
Thailand Singapore Malaysia Indonesia Philippines Vietnam (est.)
• SEA imports have risen by 10-25% since 2012
• Thailand, Indonesia and Malaysia are key importers
• Vietnam remains a growing market
Copyright © 2016 Argus Media group. All rights reserved.
Indian pricing mostly at discount to China
-80.00
-60.00
-40.00
-20.00
0.00
20.00
40.00
60.00
0.00
100.00
200.00
300.00
400.00
500.00
600.00
01
-Jan
-20
13
01
-Mar
-20
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-May
-20
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01
-Ju
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3
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-Se
p-2
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-No
v-2
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3
01
-Jan
-20
14
01
-Mar
-20
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01
-May
-20
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-Ju
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-Se
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-No
v-2
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4
01
-Jan
-20
15
01
-Mar
-20
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01
-May
-20
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01
-Ju
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01
-Se
p-2
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5
01
-No
v-2
01
5
01
-Jan
-20
16
01
-Mar
-20
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01
-May
-20
16
01
-Ju
l-2
01
6
01
-Se
p-2
01
6
01
-No
v-2
01
6
01
-Jan
-20
17
01
-Mar
-20
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01
-May
-20
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01
-Ju
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01
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01
-Se
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-No
v-2
01
7
01
-Jan
-20
18
01
-Mar
-20
18
01
-May
-20
18
01
-Ju
l-2
01
8
China-India spread 2013-18
China-India spread CFR China CFR WC India
Copyright © 2016 Argus Media group. All rights reserved.
India remains key emerging market
0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
1800000
2000000
2015 2016 2017
India methanol imports- 2015-17
Iran Saudi Arabia Oman Malaysia Russia Others
70%78% 65%
• Iran remains as the major supplier
• Formaldehyde makes up about 70% of the total demand
• Fuel applications- still in early stages
• Domestic plants unable to operate on cost issues
• Growth forecast around GDP rates
Market Reporting
Consulting
Events
Agenda
• Global methanol market & changes• What’s happening in Asia• China MTOs & an update• A quick look at SEA & India• Conclusion
Copyright © 2016 Argus Media group. All rights reserved.
Conclusion
• China will continue to add new MTOs and CTOs in the next few years, driving incremental demand. But margins to face pressure with high methanol prices and downstream pressure.
• Iran to add new plants but uncertainties and delays expected due to sanctions.
• Talks are still rife about Marjan starting production soon.
• In the near term Chinese prices may remain range bound as end-users and sellers remain locked in a stalemate.
• Shutdowns from Sep-Nov expected to cap supply excesses.
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Mahua ChakravartyPetrochemical Markets Editor
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