The anticipated startup of additional methanol-to-olefins units in China, concerns over production in Egypt and the Americas and firming crude have boosted the outlook for methanol pricing over the next year, OCI Partners CEO Frank Bakker said Friday.
The concerns over production in Venezuela and natural gas curtailments in Trinidad and Tobago will likely contribute to pricing support as well as MTBE demand and traditional downstream demand seeing a boost from improved crude pricing, Bakker said in a second-quarter earnings release.
OCI Partners operates a 912,500 mt/year methanol plant in Beaumont, Texas.
US spot pricing has recovered from the lows seen earlier this year and has allowed for some increases in contract pricing.
"At present, however, spot prices remain trading lower than discount-adjusted contract prices," Bakker said.
The company saw lower production during the quarter with a 77% capacity utilization rate due to approximately 17 days of downtime. Methanol production for Q2 reached 174,000 mt, up 10.1% from 158,000 mt in Q2 2015.
S&P Global Platts assessed US spot methanol on Thursday at 60.25-60.75 cents/gal FOB USG for August and September, slipping in recent days from an average of 63.07 cents/gal in Q2, Platts data showed.
Moving forward, Chinese MTO units appear to be a significant driver for the industry, with OCI anticipating three additional units this year adding 5 million mt/year of methanol consumption capacity.
"At present, despite unfavorable weather conditions and technical issues, overall operating rates for MTO plants remain strong at 78%," Bakker said. "Finally, methanol demand for MTO is expected to be 10 million mt by 2020, representing approximately 40-50% of total Chinese methanol demand."
