Expanding Petrochemical Sector Propelling Methanol Demand


The petrochemical industry uses methanol to manufacture methyl methacrylate (MMA), dimethyl ether (DME), methyl tert-butyl ether/tert-amyl methyl ether (MTBE/TAME), acetic acid, solvents, and formaldehyde. These petrochemical products are widely used in the construction and automotive sectors. Thus, the boom in these industries, primarily, on account of the rising disposable income of people, will create a huge requirement for methanol in the forthcoming years. Moreover, the increasing globalization will accelerate the establishment of petrochemical manufacturing facilities in different parts of the world, owing to which the consumption of this chemical will rise exponentially.

Additionally, the burgeoning demand for clean fuel, due to the surging air pollution levels caused due to vehicular and industrial emissions, will propel the methanol market growth during 2021–2030. According to P&S Intelligence, the market generated $20.0 billion in 2020. In recent years, the increasing research and development (R&D) spending on novel and sustainable manufacturing processes has become a prominent market trend, as the production of this compound requires coal and natural gas, which are available in a limited quantity and cannot be renewed or reused.

At present, methanol producers are engaging in facility expansions for amplifying their capacity and increasing their R&D activities. For instance, in March 2021, Fairway Methanol LLC was established by Celanese Corporation and Mitsui & Co. Ltd. through a 50–50 investment by both these companies. This joint venture aims to maximize the output of the existing plant and increase methanol production from carbon dioxide (CO2). Other companies following these strategies include Petroliam Nasional Berhad (PETRONAS), SABIC, LyondellBasell Industries N.V., OQ SAOC, Methanex Corporation, and QAFAC.

The feedstock segment of the methanol market is categorized into natural gas, coking gas, heavy liquid, and coal. Among these, the natural gas category generates the highest revenue in 2020 as methanol production with this source is economically feasible and easy. The cost of production of this chemical from natural gas is low because the process takes place at a moderate pressure and temperature. In comparison to other feedstocks, natural gas is more environment-friendly as it does not emit high volumes of toxic gases while burning.

Methanol formulated from all these various feedstocks is used in the automotive, construction, electronics, chemical, packaging, pharmaceutical, and paint and coating industries. The automotive industry is using a notable volume of methanol due to the rising automobile demand and the increasing requirement for alternative fuels. This industry also uses a large quantity of formaldehyde resin, a methanol derivative, in the production of interior-molded components of automobiles, to enhance fuel efficiency and reduce vehicle weight.

Globally, the Asia-Pacific (APAC) methanol market is expected to generate the highest revenue during the forecast period, primarily on account of the escalating demand for petrochemicals in the region. The petrochemical industry uses methanol in the production of acetic acid, formaldehyde, and DME. Moreover, the surging consumption of methanol-based fuel in India, China, and Japan will drive the demand for the chemical. Additionally, the accelerating automobile production, rising construction activities, and flourishing electronics industry in China and India will supplement the market growth.

Thus, the flourishing construction and automotive industries and soaring demand for alternative fuels will steer the production of methanol in the foreseeable future.

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