Analysis of the Development Trends of China’s Methanol Industry from 2016 to 2017

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Analysis of the Development Trends of China’s Methanol Industry from 2016 to 2017 Author/Source: Date: February 27, 2017 Clicks: 54 —— Ongoing industry upgrading and adjustment In 2016, amid significant fluctuations in the commodity market, China’s methanol industry was also in a process of further transformation, upgrading, and adjustment. This year, China’s ineffective methanol production capacity amounts to 625,000 tons, while the capacity of plants that are shut down on a long-term basis is 3 million tons. These figures show that China is still working to reduce excess production capacity and phase out outdated production methods. Looking back at the development history of China’s methanol industry, it is generally believed that the country’s methanol production capacity has been in a state of relative surplus in recent years. However, with the rapid development of coal-to-olefins projects using methanol as a feedstock, the supply and demand situation is changing in some regions. Some believe that China’s methanol market is currently in a state of tight balance, while other markets are shifting from being export-oriented to import-oriented. 　　By the end of December 2016, the effective production capacity of methanol manufacturers in China was 76.385 million tons, representing an annual increase of 9.5% ； Although the growth rate is higher than that of last year, we still believe that these years will see a slowdown in the growth of methanol production capacity. This is because, when taking into account only the methanol production capacity associated with olefin production, China’s new methanol production capacity in 2016 remained within 3 percentage points. In 2016, the methanol production facilities associated with coal-based olefin production in China had a capacity of 18.02 million tons, accounting for 24% of China’s total methanol production capacity. With the rapid development of the olefin industry, the number of large-scale methanol manufacturers in China is on the rise, as well as the number of facilities with a production capacity of over one million tons; the entire methanol industry is developing in a clustered manner ； Moreover, in recent years, large state-owned enterprises have gradually entered the methanol industry; however, based on capacity statistics, the methanol production capacity of state-owned enterprises in China is currently roughly on par with that of private enterprises. 　　At present, methanol production enterprises in China are still mainly located in the western regions with resource advantages. This year, an additional 6.3 million tons of methanol were produced in the northwest (some of it for use alongside olefins). In addition, new projects continue to come online in regions such as Shandong and North China. However, due to factors such as strict environmental regulations this year and supply-side reforms, the overall production level of methanol enterprises in China has seen only limited growth this year. Table 1: Statistics on China’s methanol production capacity and output from 2005 to 2016 (unit: 10,000 tons) http://img.yf116.cn/image/img/20170227/1035283812887.jpg In terms of policy, during the 13th Five-Year Plan period, strict entry requirements will continue to apply to China’s methanol industry, in order to prevent the establishment of new projects without proper consideration. Outdated production facilities with high energy consumption and significant pollution levels will be phased out. In the coming years, the constraints imposed by resources and the environment will have an increasingly severe impact on this industry. **To promote safe, clean, efficient, and low-carbon development, a number of policies and measures have been introduced to protect resources and the environment. Facing requirements such as actively controlling carbon emissions, strengthening energy management in high-energy-consuming industries, implementing the strictest water resource management systems, and enhancing the management of regulatory indicators, the methanol industry also faces certain pressures. 2017 remained a year of upgrading and adjustment for the industry; factors such as environmental protection measures, supply-side reforms, plans for new projects, and changes in raw material prices all had an impact on methanol production. According to incomplete statistics from JLCC, among the new or expanded methanol production facilities put into operation in China in 2016, some of those related to coal-based olefin production had relatively large methanol production capacities, while the capacity of the remaining facilities was 500,000 tons per year or less. Among them, the olefin-related methanol production facilities have a capacity of 5.6 million tons; the companies involved include Zhongtian Hechuang, Shenhua Xinjiang, Shenhua Ningmei, and Qinghai Salt Lake Potash Fertilizer ； Within single-project frameworks, only Xinjiang Xinye has an annual production capacity of 500,000 tons; there are 3 manufacturers with an annual production capacity ranging from 200,000 to 300,000 tons. The companies involved include Shanxi Xiaoyi Pengfei, Northwest Energy, and Shandong Yangmei ； There are 3 enterprises with an annual production capacity of 100,000–150,000 tons, resulting in a total capacity of 450,000 tons. In 2017, China’s methanol industry will see an additional 4.6 million tons of methanol production capacity added, bringing China’s annual methanol production capacity to over 80 million tons. Among these new projects, about 2.1 million tons are in the Northwest region, accounting for 45.65% of the total ； 2.3 million tons in the Shandong region, accounting for 50% ； 200,000 tons in the East China region, accounting for 4.35%. The detailed list is as follows: Statistics on new/expanded methanol production facilities in China in 2017 http://img.yf116.cn/image/img/20170227/103863828611.jpg