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Over the last two decades, a major shift in regional methanol capacity and production has occurred. Countries with large reserves of natural gas and often limited domestic consumption have built world-scale methanol facilities to monetize their low-cost natural gas. The largest producing region/country in 2007 was China; in 2012, it will continue to have the largest capacity and be the largest producer.
Another significant factor is that the size of the new mega-methanol plants (1.0–2.0 million metric tons per year) is much larger than existing plants. Thus, they will have reduced fixed costs, as well as greatly reduced natural gas costs due to strategically located feedstock giving a significant cost advantage. This will drive down the cost of methanol, and cause major shifts in trade patterns. Locations for these large new methanol plants are (or will be) Iran, Saudi Arabia, Oman, and Trinidad and Tobago.
These natural gas–advantaged countries export much of their product to developed regions such as North America, Western Europe and Japan. Consequently, producers in the more economically developed regions have shut down inefficient methanol capacity as cheaper imports have become more readily available. For example, Japan, once a major producer, now has no operating capacity. North American capacity accounted for 50% of world capacity as recently as the mid-1980s, but in 2007, accounted for less than 2%. This trend will continue, and in some regions, the effective capacity will be different from the nameplate capacity, as a result of expected idling of capacity.
The following pie chart shows world consumption of methanol:
Worldwide, formaldehyde production is the largest consumer of methanol. This demand is driven by the construction industry since formaldehyde is used primarily to produce adhesives for the manufacture of various construction board products. Historically, the major end product has been plywood, but in developed countries, demand is also driven by the expanding use of engineering board products such as OSB (oriented strandboard). These wood composite products require more formaldehyde-based resin per square foot of board than plywood. Demand for formaldehyde is highly dependent on general economic conditions, and, as an example, a slowdown in construction can considerably reduce formaldehyde demand.
The second-largest market for methanol worldwide is methyl tertiary-butyl ether (MTBE). In the United States, consumption increased substantially when the Clean Air Act Amendments (CAAA) of 1990 mandated that oxygenated compounds be added to gasoline as one aspect of a program to alleviate air pollution. In recent years, MTBE has come under environmental attack, primarily because it has been found in groundwater that has come into contact with leaking underground gasoline tanks. California—formerly the leading consumer of MTBE—banned the use of MTBE at the end of 2003 and several states followed suit. Methanol consumption for MTBE has been on the decline in the United States since 1999 and it is likely that MTBE’s consumption will decline further at a steady level, supported only by export-driven demand.
Acetic acid is the third-largest methanol derivative. A major portion of acetic acid is consumed for the production of vinyl acetate monomer (VAM). Demand for acetic acid tracks the demand for VAM, which (globally) is projected to grow at a moderate average annual rate from 2007 to 2012.
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