U.S. Producers of Methanol Prepare for Negative Growth; International Producers Spend $2.6 Billion in New Capacity

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). During the last year, Industrialinfo.com has identified eight international methanol projects totaling nearly $2.6 billion in capital spending for grassroot capacity or unit additions producing methanol. However, U.S. producers are in quite the opposite posture with several locations closing this year as a result of low demand and the possible phase out of methyl tert butyl ether (MTBE). See related article Air Products Plans to Close Ammonia and Methanol Production in Florida.

Click the image at right to view a listing of International Methanol Projects Scheduled to Kick-Off in 2003

U.S. methanol producers have been plagued by poor market conditions for the past two years, as evident in the amount of idled plant capacity. Behind formaldehyde and acetic acid, methanol's third largest chemical use is in the production of MTBE. If MTBE production is eliminated as a fuel oxygenate, more closures and negative growth can be expected from methanol producers. Reports last year that both acetic acid and formaldehyde appeared to be positioned in stable roles for a small amount of growth in 2003 could prevent a catastrophe for this segment of the chemical industry if MTBE's use in gasoline is eliminated or reduced over the next year. Further increases in the cost of natural gas could also play a significant role in plans to close additional capacity, as it is the primary feedstock for methanol production.

On the international front, spending for methanol is positive for 2003. Producers abroad are developing infrastructure industries in regions and markets that depend on methanol as a building block for methanol derivatives such as acetic acid, formaldehyde and oxygenates. "Over the past five years Industrialinfo.com has reported over thirty international methanol grassroot plants or expansions and the growth appears to still be significant," commented Trey Hamblet, Chemicals Group Manager with Industrialinfo.com.

Australia, Chile and China are homes to the largest portion of the spending identified in the eight projects reported last year by Industrialinfo.com.