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China Methanol Traders' Eyes on Crude Price in 2016

China Methanol Traders' Eyes on Crude Price in 2016

05 February 2018
Category: News
Methanol demand in China is still expected to grow in 2016. However, the increase scale highly relies on the profit margin of Methanol to Olefin (MTO) plants

The Methanol demand in China increased in 2015. According to China custom, this country imported 4.5 million mt methanol during January-October 2016. This value shows more than 4.5% increase compared with the same period of 2014.

Methanol demand in China is still expected to grow in 2016. However, the increase scale highly relies on the profit margin of Methanol to Olefin (MTO) plants.

MTO capacity is tremendous in China and it is also expected to triple from the value of 1 (at end 2014) to 3 (at end 2016) million mt per year. Under this condition, methanol demand increases from 3 million mt (at end 2014) to and 18 million mt per year (at end 2016).

However, cheap crude oil is a threat to MTO projects. It can easily lower the methanol demand in China. MTO plants started in the three digit crude price. Now, low crude price means cheap naphtha which is the main feedstock of olefin production. The plunge in naphtha price makes the MTO projects less profitable and consequently lowers the methanol demand. Under this condition, the MTO projects would work by low operating rates and the development plans would freeze.

All in all, low crude price affects all oil, gas and petrochemical sectors. When it comes to Methanol in China, the low crude price has another noticeable effect which is rooted in the MTO projects profitability.

 

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