Analysis and judgment on the supply and demand situation of foreign methanol market from 2008 to 2010

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Analysis and Judgment of the Supply and Demand Situation of Foreign Methanol Markets from 2008 to 2010 We believe that the methanol market does not always meet the basic conditions of the market. New equipment with high efficiency will be put into production, and old equipment with high cost will be closed. New consumer products will replace the existing methanol consumer market. It is expected that by 2009, the growth of methanol demand in various derivatives markets in the world will slow down. Major changes in Asia Pacific affecting the methanol market in the region include: India's new capacity will reach 500,000 tons/year, Malaysia's new capacity will exceed 1.7 million tons/year, and New Zealand's 530,000 tons/year new Waitara Valley plant was put into operation at half load in 2007 and will operate at full load in 2008-2009. Methanex operates the facility as a flexible asset. Most of Africa's production comes from Equatorial Guinea, which produces 1 million tons/year, all of which is exported. Most of the methanol produced in the Middle East is used to produce MTBE, which is also exported to Asia Pacific and Europe. Consumption of MTBE within the Middle East has increased in recent years as the use of MTBE was abolished in the United States and replaced by ethyl tert-butyl ether (ETBE) in Europe. Changes forecast for the Middle East include: In the second quarter of 2007, Iran's 1.65 million tons/year Zagros unit supplied products to the market. In the third quarter of 2007, Oman's 1 million tons/year methanol unit was put into operation. The 1.75 million tons/year Arazi V unit is expected to be put into operation in the first half of 2008. Most of the methanol demand growth is related to MTBE demand and exports. The demand for MTBE in the United States will end in 2008, but non-fuel applications will still retain demand. Since MTBE is cheaper than ETBE, MTBE will still be used in Europe. Since the two ethers, MTBE and ETBE, can be blended with each other, European refineries will use these two oxygenates based on cost advantages. Europe still relies on imported methanol, but the quantity is not as large as that of Asia. In the future, due to the reduction in MTBE production, Europe's demand for methanol will have negative growth. The main changes predicted for Europe are: The Netherlands' 950,000-ton/year methanol unit has been shut down, and the buyer's unit uses biomass as raw material to produce gas. This unit will be put into production in the first quarter of 2007 using natural gas as raw material and will be fully operational in 2009. ； Russia's 500,000-ton/year Toglaitti unit has also been completed and put into operation. Formaldehyde has been the main user of methanol in Europe, but demand for methanol for biodiesel has been growing in recent years. In the short term, biodiesel demand for methanol may reach 1 million tons/year. Methanol demand is expected to grow in the South/Latin America region, driven primarily by biodiesel production. Other developments include: The 1.9 million tons/year unit in Trinidad was completed and put into operation in 2006. The Super Octanos MTBE unit in Venezuela will be converted to produce other products and will no longer use methanol as raw material in mid-2007. The Venezuela Metro II unit will be put into operation in 2009 or 2010. Due to the cheap natural gas resources in this region, more methanol projects may be announced, but there are no plans to build new units yet. Uncertainty remains over Peru's natural gas supplies from Argentina, which is seeking natural gas resources either onshore or offshore. The North American market will shift to "near no production," with only three larger-capacity units in operation. These devices are the 600,000-ton/year Leondell unit in Texas, the 120,000-ton/year Woodward unit in Oklahoma, and the 180,000-ton/year Eastman unit in Tennessee. This unit uses coal as raw material. The main changes expected from 2005 to 2010 are: Celanese's 850,000 ton/year unit in Edmonton, Alberta, Canada will shut down by the end of the year ； MTBE is banned in the U.S. gasoline market, small amounts of MTBE will still be used for non-fuel purposes, and Mexico is expected to still blend MTBE into gasoline. The methanol units at Leondale and Terra are scheduled to be shut down in 2008-2010, and biodiesel production will require large amounts of new methanol. We believe that North America is no longer the largest consumer market for methanol, but its market is still large. It is easily supplied with methanol from major product distribution hubs in Latin and South America. Some important derivatives such as formaldehyde, acetic acid and methyl methacrylate are subject to strong competition from other regional production companies.