Hot topics in the methanol industry in 2017

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Hot Topics in the Methanol Industry in 2017 Author/Source: Date: 2017-12-25 Clicks: 16 1. Slower growth in global production capacity in 2017, with delays in the commissioning of some new facilities In 2017, methanol production capacity continued to increase. According to data from Zhongyu Information, no large-scale facilities were put into operation abroad during that year; only two small facilities with a combined capacity of 230,000 tons were commissioned. In China as well, the growth rate of production capacity slowed down significantly. By the end of 2017, China’s total production capacity reached 85.2 million tons, with an additional 4.2 million tons of capacity added during that year. Among these new capacities, the facility operated by Zhongtian Hechuang, with an annual capacity of 1.8 million tons, is an olefin integration facility, while the facilities of other companies are primarily intended for export. Due to factors such as environmental protection, the commissioning of some facilities that were originally scheduled to start operation within this year will be postponed to around 2018. http://img.yf116.cn/image/img/20171225/1144434228331.jpg Methanol-to-olefins remains the main driver of demand growth. By the end of 2016, two olefin production facilities at Changzhou Fude and Jiangsu Shenghong were put into operation, leading to an increased demand for methanol in those areas. Changzhou Fude, due to factors such as profits, halted operations at the end of March and is waiting for market conditions to improve. Although Jiangsu Shenghong’s plant came online at the end of 2016, it faced numerous operational issues; it was not until May that it achieved stable operation, and demand for olefins and methanol at the port increased further. In addition, Zhongtian Hechuang’s olefin production facility with an annual capacity of 720,000 tons came online in August, further increasing the domestic capacity for olefin production from methanol. By the end of 2017, according to data from Zhongyu Information, the domestic capacity for olefin production from methanol had reached 12.72 million tons. 3. Industry profits improved, and several facilities that had been shut down for long periods restarted in the first half of the year. As the methanol market continued to rise in the second half of 2016, methanol producers enjoyed substantial profits, and at the beginning of 2017, some of the natural gas-related facilities that had been shut down for long periods started operating again. Among them, methanol production facilities such as Qinghai Zhonghao’s 600,000 tons per year plant, Qinghai Guilu’s 800,000 tons per year plant, and Dazhou Iron and Steel’s 200,000 tons per year plant resumed operations around the Spring Festival. The 180,000 tons per year natural gas processing plant in Dongchen, Bayingolin Mongol Autonomous Prefecture, Xinjiang, was restarted in mid-June, and the supply volume in the region has been increasing gradually, exerting a certain impact on surrounding markets. However, at the end of the year, due to gas supply constraints, the gas processing units in the southwest and Qinghai regions were forced to shut down collectively. 　　4. Sharp rise in prices at year-end, reaching a new high in four years In the second half of the year, the domestic methanol market saw steady upward trends. Especially in the fourth quarter, there was an increase in unexpected maintenance activities at international plants, leading to reduced imports and a continuous decline in inventory levels at ports in East China. Additionally, the supply in the domestic market also decreased significantly due to environmental regulations and gas restrictions. Driven by an improved supply-demand balance as well as strong prices for commodities such as crude oil, the domestic methanol market experienced a sharp rise, with prices reaching near-four-year highs. http://img.yf116.cn/image/img/20171225/1145454234560.jpg Environmental protection measures have been further strengthened; in 2017, the central environmental inspection teams continued to carry out their oversight tasks. The areas most affected by environmental regulations that year were mainly in North China and Shandong. In May, due to the Belt and Road Initiative, environmental pressure increased in Beijing, Tianjin, Hebei and their surrounding cities. In Shanxi Province, production was restricted by about 50% for a time. Additionally, with the holding of certain meetings in the fourth quarter, as well as the implementation of the “2+26” city campaign aimed at addressing environmental issues in autumn and winter starting in October, more enterprises had to reduce their production during the heating season, resulting in a significant decline in methanol supply in North China. 　　6. In response to measures such as switching from coal to gas, demand for methanol fuel has surged. To improve air quality, efforts to switch from coal to gas or electricity have been intensified throughout the year. With the arrival of the heating season in autumn and winter, there has been a shortage of gas in various regions, and natural gas prices have risen sharply, increasing the cost of using gas. As a clean energy source, methanol is relatively inexpensive, which has led to a significant increase in its demand. It is widely used in industries such as catering and heating. According to data from Zhongyu, methanol fuel accounts for around 15% of total methanol demand this year, and its use is expected to continue to grow.