In 2023, China's total methanol production capacity still shows an upward trend, and the output growth rate remains stable, but the structural contradictions in the industry are still prominent, and the market as a whole is under pressure. This is the message from the 2024 China Methanol Industry Conference held in Jiujiang, Jiangxi Province, on April 17.
Total production capacity is still on an upward trend. According to the statistics of China Nitrogen Fertilizer Industry Association, in 2023 China's methanol production capacity reached 106.186 million tons/year, an increase of 5.8%, a growth rate of 2.7 percentage points, the actual increase of 6.455 million tons/year. Among them, the production capacity of the mono alcohol plant using the new advanced coal gasification technology is 75.83 million tons/year, accounting for 71.4% of the total production capacity, an increase of 4.9%. Compared with the past five years, the new capacity is still a relatively high level, but the scale distribution and raw material structure distribution have significantly changed.
In 2023, a total of 13 new projects will be put into operation (including 3 projects put into operation by the end of 2022). From the scale point of view, only one set of devices in Ningxia Baofeng with 1 million tons/year and above, three sets of devices ranging from 600,000 tons to 1 million tons/year, and the rest are below 400,000 tons/year. From the analysis of the type of raw materials for new production capacity, the new production capacity of coal as a raw material is 3.8 million tons/year, accounting for less than 60%, showing a downward trend for four consecutive years. Coke oven gas as raw material projects increased significantly, only last year there were 8 units put into operation, the total capacity of 2.38 million tons/year, which makes coke oven gas as raw material of methanol production capacity reached 14.186 million tons/year, accounting for 13.4% of the total capacity, an increase of 15.8%. In addition, in recent years, the coal mine furnace tail gas methanol production projects have also increased. The use of coke oven gas and ore furnace tail gas to produce methanol is beneficial to environmental protection and comprehensive utilization of resources.
Output growth remained stable. According to the statistics of China Nitrogen Fertilizer Industry Association, China's methanol production in 2023 will be 83.173 million tons, an increase of 3.7% year-on-year, and the increase rate remains stable.
From the perspective of the raw material structure of methanol production, the coal head output was 69.753,000 tons, accounting for 83.9% of the total output, an increase of 2.7%. Among them, the production of new advanced coal gasification technology reached 67.425 million tons, accounting for 81.1% of the total output, an increase of 2.6%. The output of methanol from coke oven gas was 8.648 million tons, accounting for 10.4% of the total output, an increase of 22.2%. The output of methanol from natural gas dropped to 4.377 million tons, accounting for 5.3% of the total. The output of large installations with a scale of more than 1 million tons/year was 45.8662 million tons, accounting for 55.1% of the total output, an increase of 2.6%, and a decline of 3.6 percentage points over the growth rate in 2022. The slowdown in the growth rate of methanol production in this segment was mainly due to the decrease in the number of new projects put into production, while the operation of existing plants was basically stable.
The methanol market is still in a weak position. According to Gu Zongqin, chairman of the China Nitrogen Fertilizer Industry Association, China's methanol market has been running at a low level for four consecutive years, and the situation has improved slightly in 2023, but the prosperity is still not ideal.
One of the main reasons for the slight improvement in the efficiency of methanol industry is that the coal price has gradually returned to a reasonable range. According to the statistics of China Nitrogen Fertilizer Industry Association, from the whole year, the average price of methanol in 2023 is 2338 yuan/ton, down 10.9% year-on-year; As the main raw material for methanol production, the average ex-factory price of bituminous coal last year was 1101 yuan/ton, down 19.8% year-on-year, which was higher than the drop in methanol prices. The price of raw materials has eased the cost pressure of methanol to a certain extent. However, the overall demand of the chemical industry is weak, and it is difficult to support methanol price repair. Enterprises with coal resources and methanol downstream are less affected by the market, and the methanol output is basically stable. For enterprises that only use methanol as their main product and do not have the advantage of raw material price, in the case of long-term downturn in the methanol market, some enterprises have reduced load, switched production or even stopped production.
Gu Zongqin believes that the methanol market is difficult to get out of the predicament for three reasons: First, although olefin is the largest downstream consumption area of methanol, most of them are supporting methanol, self-production and self-use, with large consumption but weak correlation with commercial methanol, and the boost effect on the market is not strong; Secondly, other downstream areas of methanol have serious overcapacity, small consumption, or slow development, and generally weak support. Third, the oversupply of the market has become the norm, on the one hand, the domestic methanol production continues to increase, on the other hand, the import volume is high, compared with foreign low-priced methanol, the competitiveness of domestic methanol products is weak, the impact of imported methanol is inevitable.
Imports of methanol increased significantly. Gu Zongqin said that in 2023, China's imported methanol volume was 14.553 million tons, an increase of 19.4%. Imports were above 1 million tons in 10 months of the year, with November reaching the highest level at 1.397 million tons. The main reason is that the recovery of international demand is not as expected, the transport capacity conditions from the Middle East to China are relatively good, and more methanol flows to China. The source countries of methanol imports are still mainly in the Middle East, Southeast Asia and the Americas, of which the top four are Oman, the United Arab Emirates, Saudi Arabia and Trinidad and Tobago, accounting for 68.7% of the total imports. Although the quantity of Iran has been significantly reduced, it is not ruled out that some goods enter our country through re-export.
Downstream demand is mixed. The apparent consumption of methanol in 2023 was 97.577 million tons, an increase of 5.8%. Downstream consumption pattern changed little, coal (methanol) to olefin still occupied the first place, accounting for 49.3%, consumption increased by 5.8%, the growth rate was relatively stable. Methanol fuel ranked second, and the proportion of consumption further increased. In terms of formaldehyde, although the demand for building materials and other fields is insufficient, the production of BDO and polyformaldehyde has increased, so that the production of formaldehyde has not decreased significantly, but it still ranks third. MTBE, supported by the increase in crude oil prices and exports, increased production significantly, and the consumption of methanol surpassed acetic acid in fourth place. Acetic acid in the new capacity driven by an increase in consumption in the fifth place. Other traditional downstream consumption changes little.
Methanol fuel is a special one in the consumption field of methanol. Although it is not an emerging downstream, in recent years, with the proposal of the "dual carbon" goal and the issuance and implementation of new regulations on ship emissions by the European Union, it has aroused widespread attention, and the potential demand prospects are very considerable. Gu Zongqin pointed out that according to MI statistics, the global orders for methanol fuel ships have exceeded 200, and the methanol demand is about 17 million tons by 2028, and the long-term potential demand will exceed 100 million tons. However, when methanol is used in the fuel field, its carbon footprint level is a key indicator, which has higher requirements for the low-carbon and green methanol products, and this trend is also the future development direction of the industry.
When talking about the current situation of the methanol market, Gu Zongqin pointed out that at present, China's methanol industry has entered a critical period of kinetic energy conversion, climbing uphill and high-quality development to build a solid foundation, and the domestic and foreign methanol market is still not optimistic in 2024.
Gu Zongqin analysis pointed out that in terms of natural gas prices, there are many factors affecting the price of natural gas in the world, and the price is still very uncertain. As the raw material prices of the world's largest methanol companies generally sign long-term agreement prices with gas production companies, the market price has an impact on the cost of methanol, but according to the situation in previous years, the impact is limited; In terms of methanol production capacity, new installations are often reported in areas rich in natural gas resources, such as the Middle East, and the situation of overcapacity will not be fundamentally changed; In the methanol product market, methanol is still mainly in the traditional field, and new and larger markets have yet to be developed. At present, the development hotspot of methanol industry is green alcohol, which is mainly caused by the carbon emission tax imposed by European countries.
"From the domestic situation, the domestic methanol market will continue to increase in the near future, mainly the production unit of methanol to olefin is still a hot spot in the development of coal chemical industry, there will be new production units, but the methanol products of coal to olefin are mainly supporting themselves, only a small amount of commercial methanol regulation surplus and shortage, which has a limited impact on the methanol commercial market; Recently, the domestic economy is better than the same period last year, and the situation of methanol downstream products shows signs of recovery; Coal, the raw material of methanol, continues to decline, which is good for reducing the cost of methanol and improving competitiveness." Gu Zongqin stressed that the overall domestic methanol market is overcapacity, it is impossible to have a fundamental change in the short term, and the market price of methanol is unlikely to rebound significantly.
