Methanol Demand Prospect in Terms of Downstream Product Profit
In 2021, China’s methanol prices fell back from highs, and the industrial profit declined. Influenced by this, the release of newly added methanol capacity was limited. Although downstream industries performed differently, the overall profit was favorable, and some fine chemicals even saw profits of over RMB 10,000/mt. In the long term, profit will be an important factor for the capacity growth of downstream industries.
Strong demand supported BDO profits to surpass RMB 10,000/mt.
In 2021, influenced by the related policies of degradable plastics, the demand for its raw material BDO increased notably, and BOD prices hit new highs repeatedly on short supply. It is calculated that the theoretical profit of BDO in mainstream regions reached over RMB 14,000/mt. Considerable profits and expected demand growth stimulated enterprises’ investment positivity on newly added projects. According to SCI, nearly 3,000kt/a of newly added units are scheduled to go into operation in 2022. In a medium and long-term, there will be over 5,000kt/a of newly added BDO capacity which may increase about 3,000kt of methanol consumption.
China’s silicone prices notched a nearly 10-year high in 2021, and the mainstream profits were over RMB 11,000/mt. On the one hand, feedstock silicon metal prices provided obvious cost support. On the other hand, market demand, especially that from the export market, kept bullish. In foreign countries, the supply became short with the operating rate declining, affected by the public health event. In Southeast Asia and some other regions, the fast development of infrastructure and the power industry also pushed up silicone demand. In addition, some changes in related taxes and fees were also good for the export of silicone. In 2022, over 1,000kt/a of newly added silicone capacity is predicted to be released in China. Supported by the continuous growth of downstream consumption and export demand, China’s silicone capacity is estimated to surpass 6,500kt/a by 2025, consuming over 3,700kt of methanol accordingly.
Electrolyte demand growth resulted in DMC supply gap.
China’s new energy vehicle industry ushered in an explosive growth in 2021 under the guidance of related polices. According to CAAM, China’s sales volume of new energy vehicles will reach 3.4 million in 2022, up 15% Y-O-Y. The corn component of new energy vehicles is battery, and DMC, as the important feedstock of battery electrolyte, saw price increases due to tight supply in 2021. In the future, influenced by the “Dual Carbon” target, the sales volume of new energy vehicles is expected to maintain fast growth. Consequently, more DMC projects will be built to meet the supply gap, which may bring over 1,000kt of methanol consumption in the next five years.
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