Seek information about methanol

China's methanol production capacity seems to be a mystery, with numbers so large that investors can "talk about it".

Some say China's methanol production capacity will reach a record high of 45 million tons per year in 2010, and one chemical analyst even calculated that China's methanol production capacity will reach 64 million tons per year in the next few years. Relative to the digestibility of methanol in China's domestic market, this figure inevitably makes people afraid. Chen Weiguo, secretary-general of the China Alcohol Ether Professional Committee interviewed by the reporter, said that the rationality of investors and the actual market demand will ultimately determine the capacity of methanol.

Chen Weiguo told reporters that in the next 2-3 years, the release of China's methanol production capacity will have a historic breakthrough, and the global methanol production capacity will continue to a climbing momentum. The methanol digestion channels accompanying the release of methanol capacity may see a breakthrough.

How much real methanol capacity will China have in 2010?

Chen Weiguo frankly told reporters that there is no department that has done accurate statistics on it, nor can it do so. That's because methanol is an intermediate chemical product, and as the market changes, manufacturers will adjust their output at any time.

Related information shows that in recent years, China's methanol production has risen very rapidly. 1998 production was 1,488,700 tons, 1,986,900 tons in 2000, 3,260,000 tons in 2003, 4,466,500 tons in 2004, 5,690,000 tons in 2005, and 7,620,000 tons in 2006. 2007 is expected to produce 9 million tons or so.

For China's methanol planning projects, Chen Weiguo himself has done an incomplete statistics, the statistics are about 88, 48.5 million tons per year. Among them, 14 natural gas to methanol, 7.7 million tons/year; 11 coke oven gas to methanol, 3.05 million tons/year; 63 coal to methanol, 37.75 million tons/year (Phase I). If counting the second phase of the planned projects, the total capacity of China's methanol projects reaches 63.95 million tons/year.

"Whether these planned projects can actually produce capacity in the end, this result ultimately depends on the market." After all, Chen Weiguo said, investors are now rational and investments are about returns. He made a conservative estimate of China's methanol capacity supply: 2010 at 20 million tons/year, and in 2015 it will reach 24 million tons/year.

Chen Weiguo told reporters that global methanol prices soared at the end of 2006, which was actually caused by the decline in foreign production capacity; since this year, the global methanol production capacity has grown very rapidly. "In 2005, the global methanol production capacity of 48.6 million tons, the output of 36 million tons; 2010 methanol production capacity will reach 64 million, in 2015 up to 72 million tons, the target market for new installations mainly for Asia and China."

During 2006-2008, there were 24.25 million tons/year of methanol projects under construction worldwide. There are 18 sets of projects larger than 900,000 tons/year. Of these, nearly 2.8 million tons/year are under construction in Saudi Arabia and 3 million tons/year in Iran. By 2010, the Middle East adds 15 million tons/year of methanol supply, while South America adds about 7 million tons/year.

The Middle East and other places are rich in natural gas, the price is only equivalent to RMB 0.15-0.30 yuan / cubic meter, made of methanol shipped to the coast of China all costs only about 1000 yuan / ton.

While the global methanol production capacity is increasing, some methanol plants will be closed. Among them, North America in 2008 before the closure of 4 million tons / year, Western Europe will close capacity of 1.5-1.8 million tons / year.

With the increase of world methanol production capacity, the opening of digestion channels is also imminent. Chen Weiguo told reporters that the current traditional methanol usage has not changed much. "Methanol as a fuel, or the production of dimethyl ether to extract olefins and other chemical raw materials, this aspect of the dosage is amazing, but to form a scale, it is estimated to be after 2010."

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Related data show that China's methanol production capacity has accounted for 1/4 of the world's production capacity, and there are more domestic methanol projects under construction and proposed, with a total capacity of more than 15 million tons/year, and these projects, if they can be carried out successfully, are expected to reach a total domestic methanol capacity of approximately by 2010 20 million tons. This marks that China will grow from the original methanol importer to exporter, and is developing to the status of the world's methanol powerhouse, becoming the new focus of the world methanol market. However, in today's situation, China's development of the methanol industry, opportunities and risks *** exist.

"Four major opportunities" to burn methanol

In China, good national policy has become the number one opportunity for the development of the methanol industry. China has been the world's second largest energy producer and consumer, in 2006 China's crude oil apparent consumption of 322 million tons, imports of crude oil 145 million tons, oil dependence on the outside world of 43%, the lack of oil supply has become one of the main conflicts affecting the development of China's economy and society, in order to energy security, the country focuses on the long-term development of the "development of alternative energy" major opportunities. Development of alternative energy" is a major strategic initiative. The National Development and Reform Commission of the preparation of the "coal chemical industry development plan" for the development of coal-based methanol alternative energy planning layout, while all over the country is also in accordance with national planning principles and local resource conditions, and actively organize the preparation of the corresponding industrial development plan, the implementation of the construction project, the development of product standards. It can be expected that in the near future, China's methanol market will flourish.

The extraordinary development of China's methanol industry and the dramatic expansion of its production capacity have given the whole industry an opportunity for consolidation. Currently, there are methanol production plants in more than 30 countries around the world, and the world's total methanol production capacity was 49.65 million tons in 2006, and will reach 50.99 million tons in 2010. The world's methanol production is mainly based on large-scale, of which the capacity is more than 300,000 tons/year accounted for 80% of the world's total methanol production capacity. China's methanol enterprises to become bigger and stronger, must be through industry integration, while enhancing the comprehensive strength of enterprises, to become internationally competitive enterprises.

There are many opportunities for the downstream development of the methanol industry. Because methanol is one of the important basic chemical raw materials, many downstream products can be used to produce formaldehyde, acetic acid, synthetic rubber, methylamine, dimethyl terephthalate, methyl methacrylate, chloromethane, methyl tert-butyl ether and a series of organic chemical products, but also can be added to gasoline blending or instead of gasoline as a power fuel as well as used to synthesize methanol protein. In the world's basic organic chemical raw materials, methanol consumption after ethylene, propylene and benzene, ranking fourth. 2003 to 2006 China's GDP has been maintained at a growth rate of about 10%, the rapid development of the national economy, so that the downstream industry of methanol to maintain a faster growth trend, the downstream of the new areas of consumption, although there are a number of uncertainties, but strategically there is still a huge space for development, the technology, capital and cost comparative advantage. The comparative advantages of technology, capital as well as cost are the ultimate deciding factors.

With the dwindling of oil resources and the reduction of methanol unit cost in the world today, the use of methanol as a new energy source has become a trend, and China's methanol industry is experiencing an opportunity for energy reserves. The role of methanol as an alternative fuel has been widely recognized. The goals of coal-based methanol substitution are: methanol-based dimethyl ether to replace civil LPG and to replace diesel fuel, methanol-based olefin to replace chemical raw material oil, and methanol-based automotive fuel to replace gasoline. Among them, safety, standardization, sustained price comparative advantage is the urgent need to break through the bottleneck.

"Five risks" loom over methanol

The high capacity growth rate in recent years will make China's methanol industry capacity risk. 2000 to 2006, the global average growth rate of methanol production capacity of 5.64%, if you do not take into account China's factors, 2000 to 2006, the global average growth rate of methanol production capacity is only 2.68%, the global average growth rate of methanol production capacity is only 2.68%. If China is not taken into account, the average growth rate of global methanol production capacity was only 2.68% between 2000 and 2006. It can be seen that due to the high price of methanol in China, the profit is highlighted, and the methanol technology is mature, the process is simple, the investment threshold is low, and now the downstream industry of methanol is in the period of high growth, the current growth rate of China's methanol is amazing. According to Shanghai Coking & Chemical Co., Ltd, the average growth rate of methanol production capacity in China between 2000 and 2006 was 20.6%. In terms of methanol plant start-up rate, the global start-up rate is running smoothly at a high level (83% to 86%), while the start-up rate of China's methanol plant is low (50% to 70%) and fluctuates greatly. 2004 to 2006, the average annual growth rate of China's methanol production capacity was 28%, 36%, and 50%, respectively. In addition, China's methanol production projects under construction are large, with a total scale of more than 17 million tons under construction, the vast majority of which reached production between 2007 and 2008. Based on the above data, it can be expected that China's methanol production capacity before 2009 will still maintain an annual growth rate of nearly 30%, the growth rate far exceeds the traditional demand growth rate, methanol production capacity will be a serious overcapacity.

From the large fluctuation of China's methanol plant utilization rate, it can be seen that China's methanol industry is vulnerable to external influences and strong cost risk. In addition, China's energy prices are low, and the country has introduced relevant policies to gradually align domestic energy prices with international energy prices, which will further weaken the price competitiveness of China's methanol and international methanol. From the analysis of the cost of large-scale methanol plant, the international large-scale methanol plant manufacturing costs are lower, price elasticity is greater, stronger anti-risk ability, while China's methanol plant costs are higher, price elasticity is greater, lower anti-risk ability. Natural gas plant methanol, although currently lower cost but facing greater pressure to increase prices.

The distribution of China's energy base is predominantly inland, and the transportation risk is aggravated. Because most of the proposed methanol plant under construction in Mongolia, Shaanxi, Henan, Jin and other western regions, outbound transportation to the main consumer is rail-based, and China's railroad capacity is now quite tight, in the future for a long time capacity will not have a fundamental increase in freight rates are also showing an upward trend, since April 10, 2006 onwards, the average price of rail transportation rose by 0.44 cents / ton kilometer, or 5 percent. And the characteristics of methanol require the use of special tank cars, empty return and capacity waste, so that the tension of rail transportation further aggravated. This tension makes the stability and flexibility of methanol from the mainland to the coastal areas insufficient and cannot be adjusted in time according to customer demand. Transportation costs account for a large portion of methanol prices (15% to 30%), so this has led to an increase in methanol prices.

China is a country with much coal, little gas and lack of oil, and there is a great risk of energy resources. The feedstock for methanol in China is mostly coal (80%), with the rest being natural gas, and a very small amount of coke oven gas and industrial tail gas. However, instead of reflecting the advantages caused by the rapid development of China's industry this year, the cost of production for enterprises has generally risen significantly, while natural gas is also facing upward pressure on prices. In the long run, China's energy supply will remain moderately tight, especially natural gas, the supply capacity may lag far behind the demand; coke oven gas to methanol is subject to the high cost of treatment, the limited unit of gas, the scale is difficult to be larger and other factors. All these will restrict the development of the methanol industry.

China's methanol industry still has downstream risks. At present, methanol use is still dominated by traditional fields, such as formaldehyde, MTBE, acetic acid, pesticides, etc., and the demand in these traditional fields is quite stable. The new uses of methanol such as alcohol ether fuel, methanol to olefin and other areas of speculation is hot, but the barriers to entry are high, the prospects are uncertain, and no substantial demand has yet been formed. Moreover, the direct use of methanol as a fuel has not yet been finalized, and its impact on the environment and equipment has yet to be studied and evaluated. Only a few provinces, such as Shanxi and Heilongjiang, have issued local standards, and no unified national standards have been formed.

"Four keys" to methanol

In a situation where risks and opportunities coexist in the industry, China's methanol industry should develop more healthily, and it is important to grasp the opportunity to constantly seek opportunities for development, and to prevent risks and minimize losses brought about by the risks to which we need to pay more attention. There are four core issues affecting the future of China's methanol industry. We should pay attention to the following key factors in the development of the methanol industry:

One is whether the rapid growth in downstream demand for methanol can absorb the new capacity. Rapid economic growth makes China need a lot of methanol, but whether China can digest the many new domestic production capacity is still unknown, although there have been enterprises directly built some downstream devices, but for the digestion of raw material methanol production capacity of the rapid expansion, is far from enough, in the long run, will inevitably lead to the domestic supply of methanol oversupply.

The second is the industrialization of methanol-to-olefin technology and how far. Methanol to olefin technology is also bullish on the new use of methanol, but so far there is no real sense of the world's industrial plant completed and put into operation, many of the technologies are still improving, the entire methanol to olefin technology is still in the experimental stage, and industrialization is still a certain distance.

Thirdly, whether China's current methanol phenomenon is overheating. From a variety of statistical data, even if not counting the planning of the methanol project, China's future production capacity of methanol is far greater than the demand, in the methanol fuels, methanol to olefin and other technologies are not yet fully mature conditions, the new methanol project needs to be cautious and prudent.

Fourth, the competitiveness of methanol as an alternative energy source. Methanol as an alternative energy can be recognized by the market and rapid development, but also depends on its own competitiveness, that is, performance and cost. In the case of performance match, the cost of substitution is the key. Therefore, the development of methanol industry, we must consider the comprehensive cost of its own alternative, including: the cost of raw materials, production costs, storage and transportation costs, sales costs, as well as environmental costs, etc., only in the case of comprehensive costs lower than the cost of alternative, the development of methanol may become a profitable industry.

Only by thinking seriously about these four issues can China's methanol industry develop in a healthy and orderly manner.

The future development of China's methanol industry to be bigger, better and stronger, to participate in international competition, the establishment of large-scale methanol production units, reduce production costs, and vigorously develop the downstream products of methanol, so that it is necessary to diversification, serialization, refinement of the direction of development.

According to the analysis of the development of the domestic methanol market in recent years and future market demand, the "Eleventh Five-Year" period of the domestic market demand for methanol, in addition to the downstream derivatives of formaldehyde, acetic acid, pharmaceuticals and other traditional chemical products to maintain strong growth momentum, methanol system dimethyl ether, olefins will be guided by the country's alternative energy strategy to become the main driver of growth in methanol market demand. Methanol market demand growth of the main driving force. The medium and long-term development of the methanol market lies mainly in the large-scale industrialization of methanol-to-olefin and methanol-to-dimethyl ether substitution of diesel. China International Engineering Consulting Company Liu Xiaotong said: "If the methanol to olefin industrialization and dimethyl ether to replace diesel used as automotive fuel progress smoothly, is expected to 2020 methanol to olefin production capacity will reach more than 8 million tons of dimethyl ether to replace the liquefied petroleum gas market demand of 20 million tons of the corresponding need for methanol more than 54 million tons. "

Adjusting the production structure and scale of methanol, vigorously develop the production and application of methanol downstream products, to realize the transformation of resource advantages to product advantages, the rapid development of the methanol industry can become a reality

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