US shale gas-based methanol projects may face delays or cancellations due to falling margins, Mark Berggren of Methanol Market Services Asia said during the India Methanol Economy International Seminar in New Delhi, India.
US methanol cash margins peaked at $300/mt in the fourth quarter of 2013, but has since fallen to less than $50/mt in September, according to MMSA data. "But when margins are low, it's very hard to justify new construction," Berggren said.
Poor methanol price expectations in the US has blunted interest in new startups.
"Three projects are likely to get the green light to go ahead; the rest of the [proposed projects] all have their own individual issues, and I wouldn't expect them to be commercially active in the next five years," he said.
There are currently 15 projects planned on the US Gulf Coast, according to MMSA.
Plants expected to be completed within the next five years include Natgasoline in Beaumont, Texas, with a nameplate capacity of 1.7 million mt/year; Yuhuang Chemical in St. James Parish, Louisiana, also with a capacity of 1.7 million mt/year; and the Big Lake Fuels project in Lake Charles, Louisiana, with a capacity of 1.4 million mt/year.
The remaining plants may not come to fruition "unless some big consumer in India or elsewhere were to help one of these projects out," Berggren said. "They need [customers with] firm consumption."
A potential source of demand could be China, he said.
"China is incredibly the world's largest producer and the world's largest importer of methanol. It cannot get enough of this product," Berggren said, adding that the global shipborne methanol trade had reached more than 25 million mt/year in 2015. He only expects this figure to increase going forward.
