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Insight | Time:Dec 5 2017 1:32PM
The plight of China's natural gas-based methanol capacity
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The consumption of natural gas is increasing in China, as the government puts forward the plan of replacing coal with natural gas and clean energy to reduce pollution and improve the environment. Since the beginning of the winter of 2017, the deficit in natural gas and liquefied natural gas (LNG) supply has become larger. In some regions, natural gas production for industrial use is capped as the residential application is prioritized. Therefore, some methanol plants with natural gas as feedstock are affected.

China’s methanol plants fed by natural gas are mostly located in Sichuan, Chongqing, Inner Mongolia, Qinghai and Xinjiang. The economics of methanol production based on natural gas has been improving in the recent year. And plant operating rates were raised in 2017, with several long-idled plants resuming production. These plants which were taken back on line includes Qinghai Guilu, Qinghai Zhonghao, Inner Mongolia Berun and some others in Sichuan and Chongqing.

China’s methanol capacity based on coal reached 59.91 million mt/yr as of Nov 2017, taking up to 70.8% of entire capacity; that based on coke oven gas at 14.46 million mt/yr, accounting for 16.7%; and that fed by natural gas at 10.52 million mt/yr, occupying 12.4%.

According to CCFGroup’s data, the combined capacity of those lengthy-idled methanol plant based on natural gas totaled 3.82 million mt/yr, while the other 6.7 million mt/yr of capacity was operating in 2017. In November, however, several operational plants either closed or cut operating rates in dearth of feedstock supply. In Xinjiang and Qinghai, gas supply was restricted as the government prioritized the ratio of gas in residential use. In Sichuan and Chongqing, the scant of gas supply came as a result of gas field turnarounds.

Operation of all natural gas-based methanol plants in China
Location Company Capacity (kt/yr) Status
Xinjiang Bazhou Dongchen 180 Closed on Oct 15
Xinjiang Karamay Methanol Plant 200 Long-idled
Xinjiang Kuqa Xincheng Chemical 200 Long-idled
Qinghai Zhonghao Natural Gas Chemical 600 Closed on Nov 24
Qinghai Golmud Oilfirld 300 Long-idled
Qinghai Qinghai Guilu Chemical 800 Closed on Nov 25
Gansu Lanzhou Bluestar 200 Long-idled
Gansu Gansu Liuhua 100 Long-idled
Shaanxi Yulin Natural Gas Chemical 1# 510 Long-idled
Shaanxi Xianyang Petrochemical 100 Long-idled
Inner Mongolia Berun Group 400 Running stably
Inner Mongolia Berun Group 950 Long-idled
Inner Mongolia Tianye Chemical 200 Long-idled
Inner Mongolia Chifeng Boyuan 150 Running stably
Henan Pingmei Lentan Chemical 330 Long-idled
Shandong Binzhou Xintianyang 60 Long-idled
Henan CNOOC 1400 Running at reduced rate
Sichuan Sichuan Chuanwei 870 To close on Dec 10
Sichuan Da Steel 200 Running stably
Sichuan Luzhou Natural Gas Chemical 400 Closed on Nov 2
Sichuan Jiuyuan Chemical 500 Running stably
Sichuan Wanli Chemical 150 Running stably
Chongqing Carbinol 850 Running at reduced rate, to close later
Chongqing Jiantao (Kingboard) 450 Long-idled
Guizhou Bijie Dongneng 220 Long-idled
Heilongjiang Daqing Oilfield 200 Closed on Nov 9

These plant shutdowns could affect regional supply-demand structure. Methanol products are expected to flow into Qinghai, Sichuan and Chongqing. And offtake in Shaanxi and Xinjiang is likely to gain pace.
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