Global Industry Analysis (2017-2020) – Growth Trends and Market Forecast (2021-2025)
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A Versatile Application Base Sustains Robust Rate of Global Methanol Consumption
Popularly referred to as wood alcohol, or wood spirit, methanol serves a vital role in production of several industrially important chemicals, prominently acetyls, and formaldehyde. Being one of the clean-burning fuels, methanol is also popular as a safe transportation fuel alternative. In addition to a notably low evaporation rate, and radiant heat energy, methanol gains traction on the back of its excellent miscibility in a variety of industrial solvents. It thus plays a crucial role as a versatile feedstock in production of pharmaceuticals, resins, perfumes, plastics, plywood, paints, explosives, foams, and adhesives. Methanol is being increasingly perceived as a preferred fuel alternative to conventional gasoline, and is extensively used across the key countries in North American, and European regions.
While this forms a solid application base that drives the global methanol market at a significant pace, its exceptional efficiency, and ready availability remain the key factors fuelling the demand for methanol worldwide. Falling natural gas prices have been favouring the growth of the methanol market over the past few decades, which will further receive support from an expanding end user base. However, methanol exposure has some potential hazards associated with it, which are likely to create a roadblock in rapid growth of the methanol market. Fluctuating methanol prices will also play out as a longstanding challenge facing market participants in addition to stringent regulatory norms, and policies regarding manufacturing, and application of methanol, and other similar products.
Methanol Set to be a Potentially Zero-emission Marine Fuel
The potential application of methanol as an efficient, safe, and economical marine fuel points to an attractive emerging area of opportunity for methanol manufacturers, as well as investors in the global methanol landscape. Methanol is being looked at as an excellent transition fuel for the maritime industry. Although not a zero-emission fuel alternative to conventional fuels at this point in time, unlike ammonia, and hydrogen, there are strong indications of renewable methanol coming to the fore as an option in the long run. Shippers are generally well-versed with handling methanol. It also 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, and the global zero-emission targets for 2050. Around half the vessels that would be ordered post-2025 are expected to be powered by dual-fuel engines, and would utilise major methanol volumes. In a nutshell, methanol is set to become a preferred transition fuel for marine transportation soon.
Formaldehyde Continues to See Noteworthy Consumption
Formaldehyde remains the most sought-after segment, backed by notable consumption in its key end-use sectors like plastics, plywood, paints, adhesives, automotive, pesticides, construction, textile, and personal care. Superior blending abilities of formaldehyde also make it an ideal blended fuel candidate, which is expected to uplift its market potential in the near future. Among other derivatives, polyolefins are also expected to experience flourishing demand in line with soaring thermoplastic consumption for construction, automotive, and furniture-related applications. Considering demand generation prominently coming from sectors like plastics, packaging, transportation, healthcare, construction, and textile, the pattern of demand seems complex, and is significantly impacted by multiple market forces such as fuel prices and demand, fuel consumption, environmental policy framework, biofuel-related regulations, pace of housing markets, consumption of plastics, and demand for construction materials.
China’s Dominance Intact Despite Break-neck Rivalry with the US
Northeast Asia, led by China, continues to generate robust methanol demand. Brisk development of chemical production plants, particularly mineral turpentine oil (MTO), is underpinning consumption across the country. While the US also secures an important position in the global methanol marketplace, the escalating US-China trade war has been creating a lot of unrest, and is anticipated to alter the long-term market outlook. On the other hand, the European market continues to see steady progress. Relatively high price point of natural gas across the continent is accounting for the non-cost-competitive price of methanol here, which is compelling several production plants to curtail capacities. Europe largely relies on imports from China but is likely to shine through as bioplastics, and biopharma markets build up rapidly in the UK, and Germany.
Key Market Players Prioritise Capacity Expansion, and Bio-based Production
Methanex Corporation, the global market leader, has been reaping the benefit of a solid, extensive supply chain and distribution network worldwide. The company has strong production presence across Asian, and African markets in addition to the Americas. Besides, several other prominent players are stirring the market competition, including BASF SE, Mitsubishi Chemicals, Petroliam Nasional Berhad (Petronas), Mitsui & Co., Ltd., SABIC, Zagros Petrochemical Co., Proman AG, Yankuang Group, US Methanol, Celanese Corporation, Carribean Gas Chemical, Velro Energy Corp., Methanol Holdings Limited, and Natgasoline LLC.
- In November, 2018, BASF SE had experimented methanol production based on renewable raw materials
- In April, 2019, Celanese Corporation entered a collaboration with Mitsui & Co. for capacity expansion of methanol at its Clear Lake Facility
- Later in September, 2019, Petronas Chemicals Marketing Ltd (PCML) and the state-owned Sarawak Petchem signed an extendable agreement for methanol sale and purchase, initially for 20 years
The market space has witnessed some significant developments recently.
In the wake of an ascending preference for bio-based products worldwide, new windows of opportunities are opening up in the global market, one of which also lies in the electronics industry. Innovative technologies that are being introduced for biorefining are expected to significantly favour the progress of the methanol market.
- Methanol-powered ships are getting approvals for domestic operation, the latest across South Korea (June, 2021) as the country announces to revise the concerned regulations.
- Demand for methanol-powered tankers, containers, and ships is gathering momentum as the international shipping industry accelerates its shift towards low/no-emission movement. A global leader, Proman AG, has announced additions to its methanol-fuelled fleet (June, 2021)
- The Swedish Energy Agency has allocated a massive €30 Mn investment to a sustainable methanol project - Project AIR (June, 2021). This would be the world’s first-ever industrial, commercial methanol plant based on the Carbon Capture and Utilisation technology used for sustainable methanol production. In addition, Uniper, Fortum, and Perstorp are contributing to the project with a global objective to achieve reduced annual carbon emission