“In the past five years the methanol production had witnessed a steady growth of over 90%. The annual production capacity increased from 43.8 million metric tons in 2005 to 75.2 million metric tons in 2010,” Abdul Rahman Jawahery, GPIC President, said while commenting on the developments of the methanol-importing markets. Jawahery was of the firm view that petrochemical industry set to flourish in the next few years.
“The petrochemical industry has a correlation to the sources of energy since petrochemical products depend primarily upon energy for their manufacture and hence have a direct impact on operational levels and prices of petrochemicals on the world markets,” he said.
“Market observers will be able to note the extent of changes in energy prices, including oil and gas, upon the prices of byproducts especially petrochemicals. Reports indicate that the prices of petrochemicals are set to witness a marked improvement in the near future owing to the positive forecasts concerning the global increase in oil prices during the same period,” he said.
“The prices of petrochemicals are not only affected by the changes in energy prices but by such other factors as supply and demand and prices of other energy sources such as coal. China is one of the leading consumers of coal as one of the key sources for production of petrochemicals, including methanol,” he said.
He said that the methanol markets witnessed a significant improvement from 2002 to 2007 when the prices gradually increased to reach a level of $500 per CFR in 2007.
At that time, he added, crude prices rose from $15 per metric ton in 2002 to around $75 per metric ton in 2007. However, by the end of 2008 and owing to the economic crisis that swept the world, methanol markets were also affected by the crisis as all other economic sectors. Demand for methanol declined and prices started to fall to $150 per CFR and at that time the price of crude oil was around $40 per barrel.
“With the passage of time, the situation began to gradually improve especially in 2010 when prices stabilized at levels of more than $300 per CFR.”
Jawahery added that 2010 was considered as one of the most successful year for the Company as it was able to maintain its strategic market share.
The US was the Company’s biggest importers of methanol as it accounted to 46% of the Company’s methanol exports. The returns were attractive as GPIC was able to take advantage of the Free Trade Agreement between Bahrain and the US.
Commenting on the developments in the methanol industry with the expected increase in supply, GPIC President said that it was expected that the world growth level of methanol capacity would be between 4 to 8 per cent.
“It is expected that such capacity would reach 96.5 million tons annually by the year 2015.” He noted in this regard to the entry of a number of new plants by the end of 2010 and injection of huge investments in this sector reflecting the feasibility of such industries. The most recent of these projects is the methanol plant set up in Brunei with an annual output of 850,000 metric tons. Another plant came on stream in Egypt with a capacity of 1,260,000 metric tons. Other plants have been commission in PRC.
Reports indicate that the methanol industry in China has witnessed a major transformation in local manufacture and consumption. The country is a major importer of methanol that increased from around 1.5 million metric tons in 2005 to around 5 million metric tons in 2010. Such growth is set to reach around 14 million metric tons by the year 2014.
Jawahery said the total methanol consumption in China would reach around 17 million metric tons by 2015 in addition to the marked increased in China’s methanol production.
The country’s methanol output rose from eight million metric tons in 2005 to around 32 million metric tons in 2010.
“Such capacity is set to rise to around 41.5 million metric tons by 2015 mostly relying upon coal as feedstock in addition to natural gas. This would increase production costs as compared with plans that depend upon natural gas as their feedstock.”
“China has a strategic vision as it seeks to strike a balance between growing local consumption and supply level and imports from other sources, hence curbing price increases. GPIC methanol exports to China in 2010 amounted to around 45% of the total exports. China is the second biggest market for GPIC after the United States,” he added.