China Methanol Industry Pattern Is Changing

SCI99

2019-05-24

China Methanol Industry Pattern Is Changing

With China’s methanol capacity expanding and the downstream industrial chain extending, China’s methanol industry pattern is changing.

First, the capacity growth slowed down. Continuous capacity expansion led to oversupply in the methanol industry, and the overall profit level dropped consequently. Therefore, China’s capacity growth rate began to decline. From 2010 to 2014, the CAGR of methanol capacity was 18.77%, but it dropped to 7.72% from 2015 to 2018.

Second, the capacity concentration went up. According to SCI, by the end of 2018, the proportion of the methanol units in China with the capacity of over 400kt/a (included) reached 70.83%, up 0.2% from 2017 and up 1.14% from 2016. The proportion of the methanol units with the capacity of over 1,000kt/a (included) was 41.96%, showing an uptrend in recent five years.

Third, emerging downstream industries kept developing, and the CTO/MTO industry became the major demand growth point. The international crude oil prices remained high in past years, and the traditional coal chemical industry underperformed in China. Under such background, the CTO/MTO industry flourished. The proportions of the methanol consumption from the traditional industries, such as formaldehyde and DME, slipped year by year, while the proportion from the CTO/MTO industry gradually rose to 45% in 2018.

Finally, the downstream structure adjustments resulted in changes in the methanol trade flows. Currently, over 60% of the CTO/MTO units are concentrated in Northwest China. Influenced by this, Northwest China has become the largest methanol consumption market in China. At the same time, with fewer methanol resources flowing into other regions, the methanol import volume also surged.

On the whole, China’s methanol industry is developing towards a large-scale and intensive one, and the industry concentration will continue to ascend. The CTO/MTO industry will remain as the largest consumption field, but the methanol applications will further expand, easing the overcapacity gradually.

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