Recently, the world's major methanol producers OCI and Methanes expect that driven by strong demand growth and limited capacity increase, the fundamentals of the global methanol market will remain healthy in the medium and long term, and supply will become tight. The two companies said that with the development of a low-carbon hydrogen economy, methanol demand will rise significantly further.

　　The medium-term prospect of the methanol market is promising

　　Despite a surge in methanol production costs due to record high European gas feedstock prices and a pessimistic short-term outlook for methanol prices, OCI said methanol prices were supported by high oil prices as it is much cheaper than liquefied natural gas and gasoline and can be sold globally As a lower cost, cleaner alternative fuel. Due to the high cost of natural gas feedstock in Europe, OCI closed its methanol plant in Delfzijl, the Netherlands in June last year, and has not yet announced a date for its resumption of production. OCI stated in its recently released second-quarter financial report that the long-term fundamentals of the global methanol market are supported by strong downstream demand and high crude oil and coal prices.

　　Methanes said that entering 2022, the global methanol market has tightened, and supply is still limited by the industry's low operating rate. Rising energy prices due to the Russia-Ukraine conflict, coupled with a 3% increase in global methanol demand in the second quarter from the first quarter, contributed to a 3% rise in global methanol demand, Methanes CEO John Floren said in a recent second-quarter earnings call. The methanol cost curve provides further support. Floren said that methanol-to-olefins (MTO) plants continued to operate at high operating rates, and demand for methanol in traditional chemical applications rebounded in the second quarter. Methanol prices remained strong in the second quarter, but continued to fall slightly on the back of rising supply and short-term bearish sentiment. Methanes achieved an average methanol price of $422/ton in the second quarter, down $3/ton from the first quarter. "Going into the third quarter, our demand outlook remains stable despite global economic uncertainty," Floren said. "We believe demand growth for methanol will outpace supply growth over the medium term, even if GDP growth is weaker than expected." , the market prospect is promising.”

　　Tight supply fundamentals will persist

　　OCI预计，从2022年到2027年，甲醇市场基本面将趋紧，新增需求预计将超过新增供应700万~800万吨/年，今年全球预计没有新的主要产能投产。OCI表示，这让该公司对甲醇中期定价环境有很强的能见度。该公司补充称，甲醇需求预期不包括氢燃料需求，尤其是道路和船舶燃料的应用带来的实质性额外增长。OCI表示，甲醇近中期的需求增长预计将受到中国燃料消费水平回升的支撑，较高的油价支持甲醇替代其他燃料。此外，甲醇的传统需求仍将保持坚挺，中国能源和烯烃价格高企也支撑MTO开工率超过80%。

　　梅赛尼斯公司预计，从长远来看，占甲醇总消费量50%以上的传统化学品对甲醇的需求将受到全球和区域经济实力以及工业生产水平的影响。弗洛伦表示：“我们认为，能源相关应用领域的甲醇需求将受到能源价格、终端产品定价以及政府政策的影响。由于甲醇作为燃料的排放效益，政府政策在鼓励甲醇新应用方面发挥了越来越大的作用。”弗洛伦指出，甲醇作为船舶燃料的需求将持续增长，当前全球有超过80艘甲醇双燃料船舶已交付使用或正在建造之中。这代表着170万吨/年的甲醇潜在需求。梅赛尼斯公司表示，未来MTO生产商的开工率和甲醇消耗量将取决于许多因素。这些因素包括公司各种最终产品的定价，MTO装置与下游产品生产设施的一体化整合程度，烯烃工业原料成本相对竞争力等。

　　Methanes expects most of the new methanol capacity to be added in the next few years in North America, the Middle East and Asia. Methanes is building a new 1.8 million metric tons/year methanol plant in Geismar, Louisiana, USA. This will be the company's third local methanol plant, which is expected to be completed and put into operation in the fourth quarter of 2023. In Iran, Methanes is continuing to focus on the 1.8 million mt/year Tina methanol plant. The plant is planned to be built in the next few years. “The completion of major methanol projects in Iran and current plant operating rates continue to be impacted by sanctions, plant technical issues, and gas restrictions, especially in winter,” Methanes said. In addition, there is a 1.8 million mt/year methanol plant in Malaysia It is under construction and is planned to be completed and put into operation in 2024; some methanol production capacity will be added in the near and medium term in China. "We expect new capacity in China to be consumed domestically," Floren said.

　　Hedge against soaring natural gas prices

　　With gas prices expected to remain elevated for the remainder of this year and into 2023, both Methanes and OCI have announced that they have hedged a significant amount of their gas feedstock needs.

　　In North America, Methanes has hedged 85% of its natural gas demand for next year and 65% for the rest of the year at prices significantly below current spot prices, in order for methanol production to become more stable when U.S. spot natural gas prices shift. To be able to continue to operate the methanol plant if it is uneconomical. "Gas is our largest input cost, 50% of our cost structure, and we want to see a stable supply and price of gas, whether it's in a fixed or hedged way," Floren said.

　　OCI has already locked in 50% of its natural gas demand in the US from 2023 to 2029 at a price of $4.3/MMBtu. This provides strong price stability for more than 90% of the company's long-term natural gas needs. This includes a gas supply contract for Fertiglobe, OCI's ammonia and urea joint venture with ADNOC. Currently, less than 10% of OCI's natural gas supply is affected by volatility in European markets.