Methanol is a widely used compound with varied applications across industries. As per methanol market report, the global methanol market will continue to grow at a CAGR of 11.81 percent till 2025. The factors that are contributing to the expansion of this market are increasing demand for petrochemicals in Asia Pacific countries. Another important factor contributing to the growth of the global methanol market is the increasing demand from end-use industries such as paints, plastics, adhesives and as an alternative to transport fuels.
China has the highest demand for methanol as almost 10 percent of its demand is met through imports from other countries. Until 2022, the demand for methanol is expected to grow at a CAGR of approximately 7.1 percent.
What is Methanol?
Methanol is a compound with chemical formula CH3OH. It is also known as methyl alcohol. The other name of methanol is wood alcohol. Methanol is produced by the destructive hydrogenation of carbon monoxide. This is a non-edible type of alcohol which is widely used in the production of fuels, anti freezers, and solvents. It is a colorless, flammable, and volatile liquid which is considered harmful and poisonous for human consumption.
Market analysis and size
The trade flow of the global methanol market is going to see a shift due to the entry of Iranian methanol and expansion of production of methanol in the U.S. Because of the MTO (Methanol to Olefins) developments, China is going to see the highest growth in the demand for methanol. Close to ten percent of methanol demand in China is met through imports, even though it is the largest producer of methanol.
The demand levels will grow further due to the increasing derivative capacity in the next three years. The total capacity of derivatives of methanol will touch the following levels in a few years itself – MTO (Methanol to Olefins) 5.5 MMT/y, CTOs (Coal to Olefins) 4.2 MMT/y, MTGs (Methanol to Gasoline) 1.2 MMT/y. The methanol price premiums in the Atlantic Basin Arena have been high for over several decades. Presently, as China is creating more demand for methanol, the price premiums are gradually decreasing.
Growth drivers of Methanol
The main growth drivers of the methanol market are China’s olefins market (MTO technology acceptance) and the higher demand of the petrochemicals in the Asia Pacific region. Along with this, the demand from end-user industries such as paints, plastics, and adhesives as well as the need of finding alternatives for traditional fuels is also contributing to the growth of the methanol market.
With the growth of MTO (Methanol-to-Olefins) in China, more industries are considering methanol to meet energy demands. Through MTO, methanol will challenge naptha as a feedstock for propylene and ethylene production.
Because of the similar end usage of methanol and crude oil, methanol demand has higher growth potential.