Methanol is the Talk of the Chemical Business as U.S. Sees Bright Future in Exports

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Researched by Industrial Info Resources (Sugar Land, Texas)--Industrial Info expects the methanol segment of the Chemical Processing Industry to have some of the highest spending levels for the next three to five years. Trey Hamblet, Industrial Info's VP of Global Research for the industry, provided listeners with the latest information on this highly watched sector.

Click on the video below to listen to Hamblet discuss spending trends in the chemical processing industry.


More than 5.6 million metric tons per year of capacity is in the construction phase or has been approved and will begin construction soon. The total investment value (TIV) of this capacity is about $8.3 billion, and most of it is expected to be online my mid-2018.

A much larger amount--29.6 million metric tons per year, valued at roughly $17 billion--has been proposed, but not yet approved. But Hamblet cautioned that only a small percentage of "proposed" projects actually move forward.

"Either way, we're still anticipating a significant uptick in supply and what gets built between now and 2020, and then potentially flattening or slightly elevating beyond that," Hamblet said.

Methanol sold domestically is heavily used in the production of formaldehyde, a substance commonly found in plastics, home-building products, automotive parts and cosmetics. It is also used in the conversion of oil into biodiesel fuel.

The international market also has shown strong demand for methanol, particularly China. Four or five of largest methanol facilities being built in the U.S. are funded by Chinese investors; almost all of their product is expected to be exported to China, largely to reduce the costs associated with olefins production.

Elsewhere, methanol is blended into gasoline in a way similar to ethanol in the U.S. for transportation fuels. In some parts of Europe and Asia, methanol accounts for as much as 15% of transportation fuel content with plans to increase this blending rate substantially in the next few years. Continued efforts to boost the role of methanol in such fuels are expected to keep U.S. export demand high.

Along with other commodities, methanol's per-gallon cost has declined dramatically since late 2014, slashing margins for producers. Nonetheless, strong demand from China, where production has been negatively affected by an economic slowdown, is likely to boost demand for U.S. exports of the product during the next year.

In fact, the U.S. is very likely to become net exporter of methanol during that time and will begin competing on a global scale. Balancing domestic and international demand for the product will present as many challenges as it will opportunities for producers, and 2016 will provide their first real test.

On March 31, Industrial Info will host a free online market outlook focusing on global trends in the Chemical Processing Industry. R.S.V.P. now!

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 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. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.