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Profitability of MTO will be the key factor determining prices of methanol

CIS GAS MONETISATION

Profitability of MTO will be the key factor determining prices of methanol

Pricing in the methanol market is determined by many factors, the most significant of which are the profitability of methanol to olefins, as well as the growing demand for methanol-based fuels, said the Vice President of Methanol and Derivatives at Argus Media Dave McCaskill during the CIS Gas Monetisation conference.

According to him, while the share of MTO in the global production of ethylene is low, at the same time, about 15% of the produced methanol goes to the production of olefins. The popularity of this technology in China is caused by to low production costs due to the large reserves of cheap coal. Thus, a possible increase in oil prices may affect the economy of polyolefin production based on naphtha and increase the demand for olefins using ITO technology.

In 2019, it is planned to launch a number of new MTO factories, at the same time, a decrease in the load of enterprises is expected due to oversupply in the global market. In 2020–2021, the next wave of demand is projected due to the introduction of new polyolefin capacities in the world. In 2022, there could be a jump in methanol consumption for MTO – approximately 4 million tons, which then will be replaced by “natural” growth.

Another significant driver of demand for methanol is the fuel industry. Growth in methanol consumption in the production of MTBE and DME is predicted, as well as for compounding gasoline. An increase in methanol consumption for bunkering is likely too.

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