Methanol Market Analysis

Methanol Market Outlook

Global methanol market was valued at around US$38.2 Bn in 2026 and is projected to reach nearly US$60.9 Bn by the end of 2033, exhibiting a healthy CAGR of 6.90% between 2026 and 2033. 

A Versatile Application Base Sustains Robust Growth Rate of Global Methanol Market

Methanol, popularly referred to as wood alcohol, or wood spirit, serves a vital role in production of several chemicals and energy products. As one of the primary building blocks across chemical industry, methanol offers a key alternative solution to the challenge of achieving full decarbonization. Not just paints, solvents, and mattresses account for its widespread use - methanol is also used as a transportation fuel, (cars, trucks, ships), and biodiesel. Rising methanol conversion to olefins further contribute toward the growth of methanol market. It is an essential building block of hundreds of products that are used in everyday lives of consumers. In the past few years, methanol is being increasingly perceived as a preferred fuel alternative to conventional gasoline and is extensively used across the key regions such as North America, and Europe. The global methanol market has observed tremendous growth in energy-related applications, especially in gasoline/fuel blending.

The flexibility of methanol lies in its ability to be produced from a wide range of feedstocks - from coal, natural gas, waste, and captured CO₂ combined with green hydrogen. Its exceptional efficiency and ready availability remain the key factors powering the demand for methanol worldwide. In the past few years, plummeting natural gas prices had favoured the growth of the methanol market, especially in North America, and Europe. Methanol is majorly consumed in China to produce olefins in the processes called coal-to-olefins (CTO), and methanol-to-olefins (MTO). The global methanol market is highly influenced by factors such as natural gas prices, fuel prices & demand, liquid biofuel mandates, environmental regulations, olefins consumptions, and construction markets.  

Coal Remains the Most Preferred Feedstock Among Methanol Market Participants

Feedstock has been the most influential cost component in the total cash-cost of methanol comprising as much as 90% in some regions. Gaining access to cost-competitive feedstocks is vital to the methanol economies and market competitiveness. In 2021, coal was the major feedstock to produce methanol and accounted for more than 65% of the total methanol market. Most methanol produced in China is based on coal and fuel oil, whereas natural gas is the mostly used feedstock worldwide. In volume terms, the natural gas-based methanol demand is expected to grow with a CAGR of 7.3% between 2022 and 2029. Regions with access to natural gas such as the US, Middle East, and Latin America has seen surge in methanol capacity additions in the past few years.

In the past few years, methanol market has been observing the focus shifting toward production of methanol using renewable energy, and feedstocks. The lifecycle emissions with the existing production techniques are around 0.3 gigatonnes (Gt) CO₂ per annum which accounts for 10% of the total emissions from the chemical sector. The demand for biomethanol, and green methanol is gathering momentum as methanol produced via these processes emits zero to minimal amount of greenhouse gases. Methanol is becoming a crucial component to sustainable production and net-zero plans. Currently, the production costs are high as compared to fossil fuels, however, with process improvements and technological developments, the final cost can be lowered to make it competitive against natural gas, and coal. In 2022, PTT Exploration and Production, Air Liquide, Oiltanking Asia Pacific, YTL PowerSeraya, Kenoil Marine Services, and Maersk signed a memorandum of understanding (MoU) on a Green Methanol Value Chain Collaboration. This partnership will explore the feasibility of commencing a green methanol pilot plant based on biogenic CO₂ capture technique.          

Energy & MTO Applications Remain Instrumental to Methanol Market Build-up

Formaldehyde remained the most sought-after chemical segment, backed by notable consumption in the key end-use sectors such as construction, automotive, electronic appliances, pesticides, and furniture & bedding. More than 70% of the formaldehyde is consumed in the production of urea-, melamine-, and phenol formaldehyde resins. In 2021, formaldehyde accounted for more than 1/5^th of the total methanol market. Rising construction projects, and home improvement activities has been key driving factor contributing to demand growth of chemicals such as formaldehyde, and acetic acid, in turn boosting the expansion of methanol market.

In terms of volume, MTO & energy applications are expected to account for more than 60% of the methanol market by 2029. Region wide acceptance of methanol in fuel blending, biodiesel, MTBE/TAME, and DME has been crucial to the methanol growth in energy applications. Methanol-to-olefins has become the key consumer of methanol, especially in China. Large volume of methanol is consumed in MTO applications as compared to other uses, a MTO unit requires 3 tons of methanol to produce 1 ton of olefins. The demand for methanol-to-olefins is likely to reach around 50 Mn tons by 2029, growing at a CAGR of 8.4% between 2022 and 2029.  

With growing demand for cleaner marine fuel globally, many shippers are exploring methanol as a fuel alternative. Methanol is an accessible, and cost-efficient transition fuel that holds strong potential to play a pivotal role in helping the marine transportation sector meet emission reduction targets set by the International Maritime Organization (IMO) for 2030. Around half the vessels that would be ordered post-2025 are likely to be powered by multi-fuel engines and would utilise methanol in large volumes. In a nutshell, methanol is set to become a preferred transition fuel for marine transportation soon, which is expected to elevate the growth prospects of methanol market.

China’s Dominance Prevails in Methanol Market with New CTO/MTO Units

In 2021, China was the largest producer and consumer of methanol worldwide and accounted for more than 65% of the global methanol market. The growth in China is particularly focused on production of light-olefins and energy related applications. Diversification from conventional naphtha cracking process toward CTO/MTO units to produce olefins has been the key driver behind the growth in China. Growing urbanization, increasing investment in housing activities, and rise in automotive sales will drive the demand for methanol chemicals and energy applications. India’s methanol market is expected to exhibit the highest growth of around 8% between 2022 and 2029, to remain the most lucrative market across Asia. Low-cost shale-derived feedstock has been key driving factor for the increasing methanol production in the US Bar Middle East, the methanol production in the US has become economical as compared to other regions (Europe, China) which are considered as marginal producers.

Firm demand for housing activities, and automotive applications is expected to keep the demand in the US methanol market steady. Furthermore, IEA expects biodiesel production to increase substantially driving demand for fuel applications. Demand in Europe is expected to be hampered by geopolitical tensions, and rising energy costs. Relatively high price point of natural gas across the continent is accounting for the non-cost-competitive price of methanol pressuring the margins of producers. Europe largely relies on imports from Russia which accounts for more than 13% of the total European imports. Europe is likely to shift toward the US, China, and Middle East to meet the rising methanol demand, especially for energy-related applications.

Focus on Capacity Expansion and Biomethanol Key to Gain a Competitive Advantage in Global Methanol Market

Methanex Corporation, the global methanol market leader, has been reaping the benefit of a solid, extensive supply chain, and distribution network worldwide. The company has strong production presence across Asia, Europe, and African markets in addition to that in North and Latin America. The methanol market is highly fragmented with the top six players (Methanex, Proman AG, SABIC, Yankuang, Zagros, and OCI) accounting for over 35% of the total methanol market valuation recorded in 2021. These companies are focusing on capacity expansion and green methanol projects to gain competitive advantage, and sustainable production in the market. In 2021, Fairway Methanol LLC, a JV between Celanese Corporation, and Mitsui & Co. Ltd. announced expansion of methanol production using recycled CO₂ feedstock at its Clear Lake Facility in the US. Besides, several other prominent players are stirring the competition in methanol market, including OCI N.V., PETRONAS Chemicals Group Berhad, Metafrax, and MGC.

The Global Methanol Market is Segmented as Below:

By Feedstock Coverage

• Natural Gas
• Coal
• Biomass
• Renewable Electricity

By Application Coverage

• Chemical
  • Formaldehyde
  • Acetic Acid
  • Solvents
  • Methyl Methacrylate
  • Methylamines
  • Misc. (Silicone, Chloromethane, etc.)
• Energy & MTO
  • Methanol-to-Olefins (MTO)
  • MTBE/TAME
  • Biodiesel
  • Dimethyl Ether (DME)
  • Fuel Blending
  • Marine Fuel

By Geographical Coverage         

• North America
  • U.S.
  • Canada
• Europe
  • Germany
  • France
  • UK
  • Italy
  • Spain
  • Turkey
  • Russia
  • Rest of Europe
• Asia Pacific
  • China
  • Japan
  • South Korea
  • India
  • Southeast Asia
  • Rest of Asia Pacific
• Latin America
  • Brazil
  • Mexico
  • Rest of Latin America
• Middle East & Africa
  • GCC
  • South Africa
  • Iran
  • Rest of Middle East & Africa

Leading Companies   

• Methanex Corporation
• Proman AG
• SABIC
• Yankuang Energy Group Company Limited
• Zagros Petrochemical Company
• OCI N.V.
• PETRONAS Chemicals Group Berhad
• Mitsubishi Gas Chemical Company, Inc.
• Celanese Corporation
• LyondellBasell Industries N.V.
• Metafrax Chemicals PAO
• Ningxia Baofeng Energy Group Co. Ltd.