International Investments in Methanol Capacity Remain Strong

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Researched by Industrial Info Resources (Sugar Land, Texas). Even as the demand for merchant methanol has almost completely fallen off the radar, its uses in chemical and refining products outside of North America continues to flourish. Industrial Info is currently tracking over $4.4 billion in capital investments planned to meet future demand in international markets. This level of spending is almost double the spending Industrial Info identified for this segment of the Chemical Processing Industry over three years ago, see related Industry Alert titled: U.S. Producers of Methanol Prepare for Negative Growth; International Producers Spend $2.6 Billion in New Capacity.

This $4.4 billion in new capacity is made up of ten projects beginning construction between the summer of 2006 and fourth quarter of 2007, of which a majority of the activity is grassroot construction. These ten projects are located in the growing Asian and Middle East countries, where regional developments of petrochemical and refining markets, combined with an abundant supply of natural gas, are both present in what appears to be an almost endless supply and demand scenario. Methanol, similar to other petrochemicals, is a building block in the production of many other chemicals, including MTBE, formaldehyde, solvents, chloromethanes, and many others. Every one of these new plants and unit additions are huge, producing on average over one million metric tons per year of methanol. Construction on this scale equals a significant construction opportunity for equipment and service providers globally.

The extreme costs of natural gas in North America compared to overseas markets, and the almost elimination of MTBE in the United States and Canada, has permanently changed the future of the domestic methanol market. There remain only a handful of methanol units still operating in the United States and Canada with at least three additional plant closings completed this past summer, two in Canada and one in Texas.

The largest methanol plant currently under construction is likely the grassroot plant located in Al-Jubail, Saudi Arabia owned by National Petrochemical Industrialization Company (Riyadh, Saudi Arabia). This $500 million grassroot plant is expected to come online and produce an estimated 1.8 million metric tons per year of methanol by the summer of 2008.

Production of Methanol falls into the Chemical Processing Industry, which is one of five industries that Industrial Info covers worldwide. The other four industries are Power, Petroleum Refining, LNG, and Metals & Minerals. Contact Industrial Info's Member Center for details on International Project Coverage.

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Industrial Info Resources (IIR) is a Marketing Information Service company that has been doing business for over 23 years. IIR is respected as the leader in providing comprehensive market intelligence pertaining to the industrial processing, heavy manufacturing, and energy-related industries throughout the world.