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Released October 29, 2021 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Methanex Corporation (NASDAQ:MEOH) (Vancouver, Canada) offered some good news to its stakeholders--and the methanol market on the whole--when it recently announced it had restarted construction on a major methanol-production project that slowed significantly amid the COVID-19 pandemic and sharply weakened prices. Global energy shortages and rising feedstock costs are bolstering methanol prices and improving the outlook for producers. Industrial Info is tracking more than $9.5 billion worth of active methanol-production projects across the U.S., more than $3 billion of which is attributed with a high likelihood (81% or more) of beginning construction as scheduled.
Click on the image at right for a graph detailing the top parent companies for U.S.-based methanol-production projects, by investment value.
Methanex's proposed, 1.8 million-metric-ton-per-year Geismar 3 methanol unit in Geismar, Louisiana, hit a major roadblock in the summer of 2020, following the COVID-19 outbreak. The project was placed in temporary "care and maintenance," with about one-third of its estimated $1.5 billion price tag deferred for nearly 18 months. Methanex's board of directors had reached a unanimous final investment decision (FID) on the project in July 2019.
In a quarterly earnings-related press release, Methanex said Geismar 3 had been "significantly de-risked" and likely would be completed on time and below its initial budget: "We have capitalized $455 million on the project, before capitalized interest and finance charges. We estimate $800 million to $900 million of capital expenditures to complete the project, for a total [investment value] of $1.25 billion to $1.35 billion. Commercial operations are targeted at the end of 2023 or early 2024."
Geismar 3 would be located next to two of Methanex's existing methanol units. KBR Incorporated (NYS:KBR) (Houston, Texas) is providing front-end engineering design (FEED) services for the project. Subscribers to Industrial Info's Global Market Intelligence (GMI) Chemical Processing Project Database can learn more from a detailed project report.
High Prices Give Hope to Methanol Producers
Methanol prices reached multi-year highs in the third quarter of 2021, as tight market conditions significantly improved the outlook for methanol producers. "Our outlook for the methanol industry is positive, and we believe that new industry supply will be needed to meet growing methanol demand over the coming years," said John Floren, the chief executive officer of Methanex, in the press release.
Over the summer, two projects that had faced delays amid the COVID-19 market setbacks moved into their engineering phases: Celanese Corporation's (NYSE:CE) (Irving, Texas) $850 million Clear Lake Methanol Plant in Pasadena, Texas, which was slowed significantly in the summer of 2020, and Syngas Energy Holdings LLC's (Channelview, Texas) $400 million Phase I methanol plant in Saint James, Louisiana, which was slowed a few months earlier. The projects would produce 1.3 million and 500,000 metric tons per year, respectively, and are expected to begin construction by the end of 2021. Subscribers can learn more from Industrial Info's reports on the Clear Lake and Saint James projects.
Rising natural gas prices also may be having an effect on the methanol producers' bottom lines. Methanol plants are among the most natural gas-intensive industrial end users, according to the U.S. Energy Information Administration (EIA), and require natural gas both as a feedstock and for process heat. Natural gas futures have soared in recent weeks amid forecasts for chilly November weather, especially in the U.S. East, are raising questions as to whether supplies will be able to meet demand this winter.
"If you think about it, in the U.S. just about everything is a derivative of natural gas," said Lori Ryerkerk, the chief executive officer of Celanese, in a recent quarterly earnings-related conference call. "In the U.S., we've seen almost a doubling of natural gas costs from last year to the current price this year. But if you think about CO [carbon monoxide], if you think about methanol--these are natural gas derivatives. So there is a kind of direct correlation to raw material feedstock."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
Click on the image at right for a graph detailing the top parent companies for U.S.-based methanol-production projects, by investment value.Methanex's proposed, 1.8 million-metric-ton-per-year Geismar 3 methanol unit in Geismar, Louisiana, hit a major roadblock in the summer of 2020, following the COVID-19 outbreak. The project was placed in temporary "care and maintenance," with about one-third of its estimated $1.5 billion price tag deferred for nearly 18 months. Methanex's board of directors had reached a unanimous final investment decision (FID) on the project in July 2019.
In a quarterly earnings-related press release, Methanex said Geismar 3 had been "significantly de-risked" and likely would be completed on time and below its initial budget: "We have capitalized $455 million on the project, before capitalized interest and finance charges. We estimate $800 million to $900 million of capital expenditures to complete the project, for a total [investment value] of $1.25 billion to $1.35 billion. Commercial operations are targeted at the end of 2023 or early 2024."
Geismar 3 would be located next to two of Methanex's existing methanol units. KBR Incorporated (NYS:KBR) (Houston, Texas) is providing front-end engineering design (FEED) services for the project. Subscribers to Industrial Info's Global Market Intelligence (GMI) Chemical Processing Project Database can learn more from a detailed project report.
High Prices Give Hope to Methanol Producers
Methanol prices reached multi-year highs in the third quarter of 2021, as tight market conditions significantly improved the outlook for methanol producers. "Our outlook for the methanol industry is positive, and we believe that new industry supply will be needed to meet growing methanol demand over the coming years," said John Floren, the chief executive officer of Methanex, in the press release.
Over the summer, two projects that had faced delays amid the COVID-19 market setbacks moved into their engineering phases: Celanese Corporation's (NYSE:CE) (Irving, Texas) $850 million Clear Lake Methanol Plant in Pasadena, Texas, which was slowed significantly in the summer of 2020, and Syngas Energy Holdings LLC's (Channelview, Texas) $400 million Phase I methanol plant in Saint James, Louisiana, which was slowed a few months earlier. The projects would produce 1.3 million and 500,000 metric tons per year, respectively, and are expected to begin construction by the end of 2021. Subscribers can learn more from Industrial Info's reports on the Clear Lake and Saint James projects.
Rising natural gas prices also may be having an effect on the methanol producers' bottom lines. Methanol plants are among the most natural gas-intensive industrial end users, according to the U.S. Energy Information Administration (EIA), and require natural gas both as a feedstock and for process heat. Natural gas futures have soared in recent weeks amid forecasts for chilly November weather, especially in the U.S. East, are raising questions as to whether supplies will be able to meet demand this winter.
"If you think about it, in the U.S. just about everything is a derivative of natural gas," said Lori Ryerkerk, the chief executive officer of Celanese, in a recent quarterly earnings-related conference call. "In the U.S., we've seen almost a doubling of natural gas costs from last year to the current price this year. But if you think about CO [carbon monoxide], if you think about methanol--these are natural gas derivatives. So there is a kind of direct correlation to raw material feedstock."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
