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Insight | Time:Dec 21 2016 10:36AM
New methanol-to-olefins plants lead to methanol supply deficit
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Methanol-to-olefins has become the first and foremost application of China’s methanol industry, since its emergence in the year of 2010. The entire capacity of the existing 25 MTO plants totals 10.33 million mt/year by November, 2016. Additionally, there’re another 2 new MTO plants to be operational by the end of 2016. Changzhou Fund Energy has started the boiler for its 330kt/yr MTO plant and Jiangsu Sailboat Petrochemical targets to start its 830kt/yr MTO plant before year-end.

MTO capacity has been growing fast since 2010 and recorded the biggest increase by 140% year-on-year in 2014, when several large-sized MTO plants started production. The capacity expanded continuously in 2015-2016.

With the application developing, methanol-to-olefins constitutes about 46% of entire demand for methanol in China. However, the proportions of methanol consumption that go into formaldehyde and DME sectors are squeezed. Therefore, methanol market is dictated by MTO more than ever.

According to CCFGroup’s calculation, China’s methanol capacity is at 80.78 million mt/yr in 2016, and the output is estimated at about 43 million tons based on average plant operating rate at 53%. Plus an estimation of 8.75 million tons of imports, China’s methanol consumption totals roughly at 51.75 million tons in 2016.

The 2 new MTO plants, without captive methanol capacity, will rely on merchant methanol supply, with a requirement for 3.5 million tons per year of feedstock. It is estimated that 40% or 1.4 million tons of the need will be covered by domestic production and the other 60% or 2.1 million tons of the appetite will be sated by imports. Therefore, some of China’s methanol plants are expected to ramp up production and the imports may increase above 10 million tons in 2017. However, the production of new overseas methanol plants will not be enough to provide such large amount of supply to China, especially in the first half of 2017, which means global trade flow may get affected with more exports diverted to China. Simply put, the startup of new MTO plants is expected to tighten both domestic and global methanol supply.
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