Methanol: 2022 Methanol Market Review and 2023 Outlook

Methanol: 2022 Methanol Market Review and 2023 Outlook

I. Methanol market supply situation

1、Domestic methanol production capacity continues to increase, growth rate slows down

According to the monitoring of China Daily, all the new methanol production capacity in the world in 2022 is concentrated in China, and the total new methanol production capacity in China in 2022 is 5.545 million tons. By the end of 2022, China had a total of 113.06 million tons of methanol production capacity, with an effective capacity of around 10 million tons, an increase of 5.7% year-on-year. And in the list of enterprise capacity of more than 1 million tons/year scale reached 23, with a total capacity of more than 44 million tons, accounting for more than 40% of the total capacity.

Let's take a look at the following new methanol production capacity commissioning plans in China in 2023.

HIseaChem expects that by the end of 2023 China plans to put methanol production capacity into operation or around 4-6 million tons, by then the total domestic methanol production capacity or around 12,000 million tons. At present, the production of new coal-based methanol plants is significantly reduced, which is mainly affected by the "double carbon" policy and the high investment cost of coal chemical projects, the subsequent development also needs to pay attention to the "14th Five-Year Plan" in the direction of new coal chemical policy guidance, and environmental protection, coal Policy changes. In the next five years, China's methanol production capacity is expected to grow at an average annual rate of 3%-5%. With industrial consolidation and technological upgrading, China's methanol enterprises will be dominated by integrated methanol-to-olefin plants of over one million tonnes, supplemented by new processes such as green carbon. Methanol to aromatics and methanol to gasoline will also gain new development opportunities as the scale of the industry expands and the supply gradually increases.

2、The commissioning of new international methanol plants has been delayed

By the end of 2022, the total global methanol production capacity reached 189 million tons, +3.3% year-on-year. Among them, China accounts for 59% of the total production capacity, a small increase compared to last year, and is the only region in the world with growth. At present, apart from China, the largest global production capacity is still Iran, followed closely by the United States, with total production capacity remaining above 10 million tonnes in 2022, but due to the significant fluctuations in energy end prices during the year, as well as the impact of softening economic demand, foreign installations stop frequently, and the overall international capacity utilisation rate is relatively low.

In 2023, the new international methanol production capacity is expected to be put into operation in Iran, the Dena petro plant originally planned to be put into operation in 2022 has been repeatedly postponed to 2023, another part of the plant originally planned to be put into operation in 2023, from the viewpoint of the commissioning progress of foreign plants in recent years, there is a certain lag. 2023 international new production is expected to be concentrated in Iran, while the United States and Russia are difficult to put into operation in the short term. There are still some small installations that are difficult to identify as being in operation due to unclear news. The US and Russia are unlikely to be put into production in the short term, and there are still some small installations that are difficult to identify due to unclear news.

Second, methanol import situation analysis

1, the impact of imports or mainly reflected in the second half of the year

According to the statistics of China, a large number of global production plans will be postponed in 2022, and from the start-up progress we know, it is expected that a small number of devices will be put into production in 2023, and a more obvious production capacity will be put into production in 2024. Although in the current global methanol production capacity scale, some of the small units put into operation has been difficult to produce a significant impact, and in 2023 global methanol is expected to remain in a situation where supply exceeds demand. From the point of view of the production distribution, in 2023 overseas methanol plants will be put into production mainly in Iran, with import pressure or in the second half of the year. Iran and the US are still the mainstream, and the export volume will still be tilted towards China at that time. The current impact of China's domestic double carbon target, some local enterprises or face backward capacity integration or elimination. And some resource-rich upstream manufacturers actively set up additional downstream products to complete the local digestion of methanol production capacity, do not rule out the possibility of the supply side of East China and other consumer places to produce a phase gap, the corresponding imports will also increase to supplement. In summary, it is expected that China's methanol imports will remain around 12 million tons in 2023.

Analysis of methanol demand

1、Economic reasons Slowing down the development of coal-to-olefin

MTO/CTO is the first major demand for methanol, and the annual consumption of methanol occupies around 55% of the total demand for methanol. However, demand for olefin products is weak in 2022 due to poor domestic and international economic conditions, etc., while raw methanol remains at a high price and maintains a loss throughout the year. As a result, the development of coal-to-olefin has slowed down, and in 2023, only Ningxia Baofeng's 1 million tonnes/year unit is scheduled to be commissioned in the second quarter. With Shenghong Refinery, the largest single-process refining and chemical integration project in China, in full operation, the external extraction of methanol by Searborn MTO is theoretically reduced by 2.4 million tonnes/year, so the growth rate of actual demand for methanol from coal-to-olefin will further slow down.

2. Traditional downstream development speed varies

In terms of traditional downstream, a large number of acetic acid projects have been launched under the attraction of high profits during 2020-2021, and the capacity of acetic acid has maintained a speed of 1 million tons/year in the past two years, and in 2023, the new capacity of acetic acid is as high as 1.2 million tons/year; in recent years, due to the implementation of policies such as environmental protection, safe production and chemical entry into the park, formaldehyde and dimethyl ether enterprises have been partially shut down and so on. DMF is planned to be put into operation, but given that there is no bright spot in downstream demand and the imbalance between supply and demand is maintained, it remains to be seen whether new installations will be put into operation.

IV. Methanol Market Outlook in 2023

In terms of the aftermarket, the domestic macro atmosphere is expected to improve in 2023, and the policy strength is expected to be high during the intensive policy period at the beginning of the year. From the current supply and demand structure, domestic methanol production capacity has already appeared a certain proportion of overcapacity, 2023 domestic continued to have new methanol production capacity plans to put into operation, the domestic methanol supply side still has some room for growth, from the scale of production, methanol production capacity growth rate is expected to slow down. On the import side, from the current process of putting new overseas installations into operation, it is expected that not many installations will be put into operation in 2023, focusing on the second half of the year, and the import supply pressure may be more obvious in the second half of the year. On the demand side, in 2023, traditional downstream and emerging downstream have new plans to put into operation devices, but MTO new capacity is mostly integrated into production, methanol clean fuel in the new energy sector represents an incremental market, the total demand for methanol is expected to increase, while the growth rate or continue to slow down, the overall domestic methanol pattern is expected to remain in a state of supply exceeds demand. The domestic methanol market is expected to rise first and then fall in 2023, with the overall oscillation running. Translated with www.DeepL.com/Translator (free version)