North America Methanol In the Spotlight

Transcription

1 North America Methanol In the Spotlight Presented to Foro Pemex Petroqimica 2013 BY Jim Jordan Jim Jordan & Associates An Argus Media Company

2 Topics for Discussion A Look at History Will New and Restarted capacity in North America create a Methanol Glut? - Expansion Outlook (Real or Not???) - Can New Applications in North America mitigate a potential Oversupply? - Trade Pattern Change?

3 (000) Metric Tons per Year Methanol Capacity and Demand in the World 160, , ,000 Total Stated Capacity 100,000 80,000 60,000 40,000 20, E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E FORMALDEHYDE MTBE ACETIC ACID M.METHACRYLATE MTO/MTP GASOLINE/FUELS SOLVENTS MISCELLANEOUS

4 When is Over-capacity not Over-supply?

5 History of Supply 1997 World Methanol Capacity was 28.5 million MT BUT North America Was King of Methanol S&D

6 North America Methanol Capacity in 2007 was: More Than 10 Million MT

7 North AM Methanol Plant Closures CLOSURES LOCATION METRIC TONS Dec-98 Georgia Gulf Plaquemine, LA 480,000 Mar-99 Fortier (Methanex) Fortier, LA 570,000 Mar-99 Medicine Hat Med Hat, Alberta 261,000 Aug-99 Ashland Plaquemine, LA 450,000 Jul-00 Sterling Texas City, TX 450,000 Dec-00 Borden Chem & Plastics Geismar, LA 990,000 Apr-01 Deleware City Delaware City, DE 200,000 Jul-01 Medicine Hat Med Hat, Alberta 570,000 Jul-01 Enron Pasadena, TX 375,000 Nov-03 Air Products Pace FL 120,000 Dec-03 El Paso Cheyenne, WY 180,000 Nov-04 Lyondell Channel View, TX 770,000 Dec-04 Beaumont Methanol Beaumont, TX 750,000 Jun-05 Clear Lake Methanol Clear Lake, TX 600,000 Sep-05 Celanese Bishop Plant Bishop, TX 500,000 Nov-05 Kitimat Canada 500,000 Apr-07 Celanese Canada Edmonton 850,000 Dec-07 Pemex Mexico 260,000 8,876,000

8 After Devastation of Shutdowns between 1998 and 2005 North America Methanol Capacity was Less than 1 Million MT

9 Looking Forward North American Methanol Capacity on Steep Rise Shale Gas Creating major opportunities for Industrial and Energy Expansion Projects Announced and Planned Methanol Projects Exceed 15 Million MT

10 When is Over-capacity not Over-supply? When Much of Existing Capacity is Not Effective Capacity - China has about 40 million metric tons of capacity - China rarely runs at more than 65% operating rates - at $300/MT (90 CPG) China typically operates below 50% - Major operating problems in Malaysia during the past two years - Significant natural gas interruptions in Trinidad since Ongoing lack of gas in Chile. 3.8 million tons of capacity operating as less than 0.8 million tons production - Other unplanned outages

11 When is Over-capacity not Over-supply? When Much of Existing Capacity is Not Effective Capacity When Prices are not high enough to Generate Profit for High Cost Producers - Once again, this drives low operating rates for coal-based producers in China - Eastern Europe with Expensive Gas

12 When is Over-capacity not Over-supply? When Much of Existing Capacity is Not Effective Capacity When Prices are not high enough to Generate Profit for High Cost Producers When Politics interfere with International Trade - Iran Sanctions - Libya Outage of nearly 2 years (Still unreliable) - Governments setting High Gas Prices (Argentina, Russia, others)

13 (000) Metric Tons per Year Methanol Demand in North America 12,000 10,000 8,000 6,000 4,000 2, E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E FORMALDEHYDE MTBE ACETIC ACID M.METHACRYLATE MTO/MTP GASOLINE/FUELS SOLVENTS MISCELLANEOUS

14 North America Methanol Expansion

15 North America Methanol Capacity Expansion Generates Questions How much is needed?

16 North America Methanol Capacity Expansion Generates Questions How much is needed? How much is too much? - 985,000 MT prior to OCI Beaumont restart last year

17 US Methanol Capacity Expansion (000) Metric Tons Announced Name Location Ownership Capacity Timing Comments Lyondell Channelview, TX Lyondell 780 Q Re-start (Permit APP) Celanese Clear Lake, TX Celanese + Partner 1,300 Late 2015 Permit June, 2013? Zero Emission Energy South Louisiana Meth South Louisana Plants 1,650 Q Announced Moss Point Methanol Moss Point, MS Leucadia 1, Capacity EST. Lake Charles Clean Energy Lake Charles Leucadia 1, Capacity EST. G2X Energy Lake Charles G2X Energy 1, For Gasoline Total 7,130 Relocations Methanex Geismar, LA Methanex 1,000 Q Under Construction Methanex Geismar, LA Methanex 1,000 Early 2016 Announced April, 2013 Un-named Lake Charles Un-named 472 In Planning Total 2,472 Unannounced, In Planning U.S. Gulf Coast 1,000 In Planning U.S. Gulf Coast 1,000 In Planning U.S. Gulf Coast 1,000 In Planning U.S. Gulf Coast 1,200 In Planning U.S. East Coast 1,200 In Planning Total 5,400 Grand Total 15,002 Jim Jor d a n & A ssoc ia t es, L P

18 With These Additions, We will have 4,850 MT by 2016

19 If ½ of the above happens, we will have approx. 7,850 MT By 2018 or 2019 BUT WAIT!

20 United States M ethanol Trade Country of Origin MT MT MT Total MT Trinidad and Tobago 3,699,296 3,756,885 3,432,373 10,888,554 Venezuela 656, ,717 1,012,898 2,551,525 Canada 4, , , ,247 Equatorial Guinea 383, , ,017 1,032,901 Brunei 13,543 37,708 10,290 61,540 Bahrain 193, ,578 74, ,824 India Japan ,391 26,310 Germany ,422 Switzerland Others 142, ,398 86, ,480 Total Imports 5,095,410 5,476,396 5,077,288 15,649,094

21 North America Methanol Capacity Expansion Generates Questions How much is needed? How much is too much? Will there be winners and losers? - Offshore Producers - Domestic Producers - Consumers - Traders

22 North America Methanol Capacity Expansion Generates Questions How much is needed? How much is too much? Will there be winners and losers? - Offshore Producers Fight for Market Share or Look for Other Markets

23 North America Methanol Capacity Expansion Generates Questions How much is needed? How much is too much? Will there be winners and losers? - Offshore Producers - Domestic Producers Fight for Domestic Market or Export

24 North America Methanol Capacity Expansion Generates Questions How much is needed? How much is too much? Will there be winners and losers? - Offshore Producers - Domestic Producers - Consumers Hope for a Really Big Fight

25 North America Methanol Capacity Expansion Generates Questions How much is needed? How much is too much? Will there be winners and losers? - Offshore Producers - Domestic Producers - Consumers - Traders Hope for Volatility which is almost Certain

26 What is the Key to the Outcome? Is it Methanol Prices? - Of Course Prices are Important

27 What is the Key to the Outcome? Is it New Applications for Methanol? - Of Course that would help MTG MTP DME Others

28 What is the Key to the Outcome? Is it Natural Gas Prices?

29 What is the Key to the Outcome? YES, IT IS NATURAL GAS PRICES

30 $ / mmbtu Crude-NG-Methanol Spot Price Correlation $45 $40 $35 US YTD $30 Methanol $25 $20 $15 Crude $10 $5 $0 NG J M M J S N J M M J S N J M M J S N J M M J S N J M M J S N J M M J WTI Crude Price $/mmbtu NG $/mmbtu MeOH $/mmbtu

31 What is the Key to the Outcome? Is it China Imports?

32 What is the Key to the Outcome? YES, IT IS CHINA IMPORTS TOO

33 KT China Methanol Implied Demand Net Imports Production Projected Annual

34 (000) Metric Tons per Year Methanol Demand in China 70,000 60,000 50,000 40,000 30,000 20,000 10,000 Imports E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E FORMALDEHYDE MTBE ACETIC ACID M.METHACRYLATE MTO/MTP GASOLINE/FUELS SOLVENTS MISCELLANEOUS

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36 In Summary: 1. North America Will Likely have More Than Adequate Methanol Supply 2. Methanol Producers (Current and Future) Will Need to Plan Carefully to Avoid Disaster

37 THANK YOU!!!!

38 Jim Jordan & Associates An Argus Media Company