The methanol industry structure may reshape

As reported, China’s methanol industry is currently undergoing significant transformation, driven by the rapid growth of emerging downstream applications like methanol fuel and methanol-to-olefins (MTO). These sectors have seen remarkable progress, particularly with large-scale MTO facilities entering commercial operations. Industry experts believe that the rise of these innovative products will fundamentally reshape the methanol landscape. Against the backdrop of persistent methanol market oversupply, it becomes increasingly critical to drive structural upgrades and enhance technological innovation. “As the methanol sector evolves, the imbalance between supply and demand will gradually ease,” noted Sun Desheng from Rui De. The MTO process typically converts around three tons of methanol into one ton of olefins. Given the ongoing scarcity of olefins domestically, this technology not only helps absorb excess methanol capacity but also meets domestic demand, creating dual benefits for the industry. During our investigation, we learned that the production capacity of MTO projects in regions like Ordos and Yulin in Northwest China totals approximately two million tons annually, consuming roughly six million tons of methanol. Xu Tao, a researcher at the Zhengzhou Commodity Exchange, suggests that this development will alleviate some of the existing overcapacity in the Northwest methanol market while offering a positive impetus to the spot market. A representative from a methanol company in Yulin mentioned that the local MTO production model differs significantly from those used in East China, such as at the Ningbo Qianyuan plant. Most MTO projects in Northwest China are integrated setups, with facilities like Shenhua Baotou and Shenhua Ningxia being self-sufficient in methanol production. “Outsourcing methanol in East China is costly,” he explained, adding that future olefins in Northwest China could enjoy a competitive pricing edge compared to their eastern counterparts.” It is noteworthy that the industrial added value of MTO far exceeds that of conventional methanol, which bodes well for the overall upgrade of the methanol industry in Northwest China. Analyst Jia Qiu-yi pointed out that the advent of MTO technology will not only influence the methanol sector but also play a role in reshaping the olefin industry. Currently, domestic polyethylene (PE) production remains constrained, and MTO will help alleviate this supply deficit to some extent. Furthermore, MTO plants often produce complementary products such as paraxylene (PX), monoethylene glycol (MEG), and butadiene, which could impact other chemicals like PTA further up the supply chain. Xu Tao emphasized that in the long term, MTO will likely prove advantageous for the methanol industry but may exert downward pressure on PE and PTA prices due to increased competition. Overall, the emergence of MTO represents a pivotal moment in China's chemical industry, marking a shift toward more efficient and diversified utilization of methanol resources.