China Methanol Industry Chain Development in Terms of Crude Oil Price Changes
Affected by the recent international situation, international crude oil prices have risen sharply, and related products made a good start after the New Year of 2022. Here let’s make a review on the changes of China’s methanol industry chain and its value chain, through the price variations of international crude oil and related products.
1. New star appeared in the methanol industry chain against high crude oil prices.
From 2010 to 2012, Brent oil prices showed an uptrend, fluctuating at $80-127/bbl. Against such a background, the 1,800kt/a CTO unit of Shenhua Baotou Coal Chemical was put into operation in 2010, representing the start of the transformation development of the methanol industry chain in China. In the following decade or so, a large number of CTO/MTO units went into operation successively. By the end of 2021, China’s CTO/MTO capacity reached 16,945kt/a. In 2022, there are still some CTO/MTO units scheduled to go into operation. After years of development, the CTO/MTO industry has became an important part of the methanol industry chain.
2. The methanol industry chain had diversified development with crude oil prices dropping.
In 2014 and 2015, the CTO/MTO industry saw a peak of capacity growth, and the newly added capacity was about 2,900kt/a each year. During the same period, the annual methanol capacity increment also reached 6,800kt/a. However, with capacity growing quickly and crude oil prices falling, the methanol industry chain began to face pressure—weakening profitability and gradual market saturation. With the continuous development of catalyst, some enterprises also started to produce MEG, ethanol and other products, forming diversified competition between oil chemical and coal chemical.
3. Crude oil prices once dropped below zero, threatening the methanol industry chain.
The year 2020 was the most memorable year for the methanol industrial chain, especially for methanol producers. Negative crude oil prices were unprecedented, heavily undermining the advantage of the coal chemical industry. The methanol price in Inner Mongolia once declined to nearly RMB 1,200/mt, and the annual average price of methanol also fell to the lowest of the past five years.
4. Demand recovery pushed up methanol prices steadily.
Although the methanol industry chain has experienced a cold winter of industry development in 2020, the relatively low price of methanol has nourished the development of those small downstream industries. Taking methanol vehicle as an example, at present, Guizhou is the region with a large number of methanol vehicles. There are about 10,000 methanol vehicles in Guiyang, and most are taxis. Compared with gasoline, methanol fuel is more economic, and the relatively low methanol prices after 2020 have also promoted its development. In 2022, the international situation is complicated, followed by rising crude oil prices. The rising cost of oil chemicals has gradually highlighted the advantage of coal chemicals. Driven by the demand, China’s domestic methanol price has also been on a rise overall. At this time, the methanol industry chain reflects its indispensable position in China's chemical industry chain and plays a decisive role in alleviating the rapid rise of crude oil prices.
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