Brief Analysis on Methanol Industry Development in a Certain Middle Eastern Country
A certain country in the Middle East is rich in oil and gas but scarce in coal. The development of energy and chemical industries has, to a certain extent, fully leveraged its advantage of abundant oil and gas resources, achieving in-depth exploitation and utilization of oil and gas resources, and meeting the demand for petrochemical products in Asia.
In 1969, the first natural gas-to-methanol unit was successfully put into operation, marking the beginning of the production of natural gas-based methanol in a certain country in the Middle East. By far, there have been 11 methanol units in a certain country in the Middle East, with a total capacity of 17,160kt/a. Most units are concentrated in Asaluyeh.
Extended shutdown time and increased shutdown units
The main feedstock for methanol units in a certain country in the Middle East comes from the South Pars gas field. The South Pars gas field is the largest natural gas field in the country, with its natural gas reserves accounting for 50% of the country’s total reserves and 7% of the world’s total reserves. The local natural gas prices are divided into two categories: civil-use and industrial-use gas. Among them, the industrial-use gas price is further divided into winter and summer prices. Due to local temperature and civil-use demand and other factors, the gas price in winter is higher than that in summer.
In recent years, it has been frequently heard that due to the increase in natural gas prices, most methanol units in a certain country in the Middle East are shut down during winter (from November to February of the following year), and the overall situation is getting worse. Starting from 2023, the shutdown cycle has been extended. In 2024, in addition to the extended cycle, the number of shutdown units has increased. The methanol capacity of shuttered units from December 2024 to early March 2025 accounted for 80% of the total capacity. It is expected that in the future, influenced by the continuous impact of domestic energy shortages and rising gas demand, the winter shutdown cycle of methanol units may be extended again. As a result, the volume of cargo arriving in China will shrink, which may further support the methanol price rise in China.
Vessel demurrage and port changes affect logistics efficiency.
Logistics issues are also an important factor plaguing suppliers in a certain Middle Eastern country and China’s domestic buyers. For a certain country in the Middle East, the vessels for methanol transportation are generally 40,000 to 60,000 dwt cargo vessels. Under normal circumstances, it takes 3 to 4 days for a 40,000 dwt cargo vessel to complete unloading from berthing. However, in recent years, due to the concentrated unloading of cargo at ports, insufficient draw, and unexpected cargo quality issues, etc., the longest unloading time for a 40,000 dwt cargo vessel can be extended to 15 to 18 days. Once the unloading time is delayed, it will lead to the generation of demurrage or a passive port change, which will greatly increase the logistics costs of importers, and eventually may result in loss-making sales. In addition, the decline in transportation efficiency also affects the turnover efficiency of the seller’s supply chain, causing problems such as overstock for the seller and affecting the overall operational efficiency.
Benefiting from cost advantage, a certain country in the Middle East sells 70%-80% of its methanol resources to China. In recent years, with the continuous growth of methanol demand in China, the methanol capacity in a certain country in the Middle East has also been expanding. However, while the capacity is mounting, the development of the country’s methanol industry also faces many challenges. For instance, the temporary tightness of local natural gas supply has affected the stability of its production. Geopolitical and logistical obstacles have also, to a certain extent, hindered the normal flow of its methanol sources. In the face of these problems, SCI believes that solutions can be attempted from the following two aspects.
Improve the rational utilization of local resources and enhance product differentiation.
Based on the existing advantages of crude oil and natural gas resources, and in combination with the demands of neighboring countries, the country should promote a large-scale and integrated development model, and promote the development of overall industrial clusters. For instance, leverage the advantages of its oil, gas and methanol resources to foster the development of olefin and downstream industries, improve the efficiency of resource utilization, avoid product homogeneity and uniformity, and enhance the added value and differentiation of the product.
Establish a supply and demand prediction model to enhance logistics efficiency.
To avoid the issue of low logistics efficiency caused by factors such as geography, policies and culture, methanol suppliers in a certain country in the Middle East can establish supply and demand prediction models for key markets. For instance, through research and data analysis of the Chinese market, the changing trend of demand can be predicted to prevent inventory congestion. Additionally, suppliers should establish long-term and stable cooperative relationships with logistics agents to enhance logistics efficiency.
The future energy and chemical industry development space of a certain country in the Middle East is huge, and it holds a rather important position in China’s methanol market. With the continuous commissioning of new methanol units in a certain Middle Eastern country in recent years, the competition with non-Iranian methanol suppliers will also become more intense, and this may further influence the trend of methanol prices in China in the later period.
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