North America Methanol In the Spotlight Presented to Foro Pemex Petroqimica 2013 BY Jim Jordan Jim Jordan & Associates An Argus Media Company
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?
(000) Metric Tons per Year Methanol Capacity and Demand in the World 160,000 140,000 120,000 Total Stated Capacity 100,000 80,000 60,000 40,000 20,000 0 2011 2012 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E FORMALDEHYDE MTBE ACETIC ACID M.METHACRYLATE MTO/MTP GASOLINE/FUELS SOLVENTS MISCELLANEOUS
When is Over-capacity not Over-supply?
History of Supply 1997 World Methanol Capacity was 28.5 million MT BUT North America Was King of Methanol S&D
North America Methanol Capacity in 2007 was: More Than 10 Million MT
North AM Methanol Plant Closures 1998-2007 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
After Devastation of Shutdowns between 1998 and 2005 North America Methanol Capacity was Less than 1 Million MT
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
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 2011 - Ongoing lack of gas in Chile. 3.8 million tons of capacity operating as less than 0.8 million tons production - Other unplanned outages
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
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)
(000) Metric Tons per Year Methanol Demand in North America 12,000 10,000 8,000 6,000 4,000 2,000 0 2011 2012 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E FORMALDEHYDE MTBE ACETIC ACID M.METHACRYLATE MTO/MTP GASOLINE/FUELS SOLVENTS MISCELLANEOUS
North America Methanol Expansion
North America Methanol Capacity Expansion Generates Questions How much is needed?
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
US Methanol Capacity Expansion 2013-2017 (000) Metric Tons Announced Name Location Ownership Capacity Timing Comments Lyondell Channelview, TX Lyondell 780 Q4-2013 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 Q4 2015 Announced Moss Point Methanol Moss Point, MS Leucadia 1,000 2016-2017 Capacity EST. Lake Charles Clean Energy Lake Charles Leucadia 1,200 2016-2017 Capacity EST. G2X Energy Lake Charles G2X Energy 1,200 2017 For Gasoline Total 7,130 Relocations Methanex Geismar, LA Methanex 1,000 Q4 2014 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
With These Additions, We will have 4,850 MT by 2016
If ½ of the above happens, we will have approx. 7,850 MT By 2018 or 2019 BUT WAIT!
United States M ethanol Trade 2010-2012 Country of Origin MT MT MT Total MT 2010 2011 2012 Trinidad and Tobago 3,699,296 3,756,885 3,432,373 10,888,554 Venezuela 656,910 881,717 1,012,898 2,551,525 Canada 4,475 103,909 150,863 259,247 Equatorial Guinea 383,986 365,898 283,017 1,032,901 Brunei 13,543 37,708 10,290 61,540 Bahrain 193,925 160,578 74,321 428,824 India 114 23 502 639 Japan 458 460 25,391 26,310 Germany 107 388 927 1,422 Switzerland 6 432 214 652 Others 142,592 168,398 86,490 397,480 Total Imports 5,095,410 5,476,396 5,077,288 15,649,094
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
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
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
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
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
What is the Key to the Outcome? Is it Methanol Prices? - Of Course Prices are Important
What is the Key to the Outcome? Is it New Applications for Methanol? - Of Course that would help MTG MTP DME Others
What is the Key to the Outcome? Is it Natural Gas Prices?
What is the Key to the Outcome? YES, IT IS NATURAL GAS PRICES
$ / mmbtu Crude-NG-Methanol Spot Price Correlation $45 $40 $35 US 2007-2012 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 2007 2008 2009 2010 2011 2012 WTI Crude Price $/mmbtu NG $/mmbtu MeOH $/mmbtu
What is the Key to the Outcome? Is it China Imports?
What is the Key to the Outcome? YES, IT IS CHINA IMPORTS TOO
KT China Methanol Implied Demand 40000 35000 30000 Net Imports Production 25000 20000 15000 10000 5000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Projected Annual
(000) Metric Tons per Year Methanol Demand in China 70,000 60,000 50,000 40,000 30,000 20,000 10,000 Imports 0 2011 2012 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E FORMALDEHYDE MTBE ACETIC ACID M.METHACRYLATE MTO/MTP GASOLINE/FUELS SOLVENTS MISCELLANEOUS
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
THANK YOU!!!!
Jim Jordan & Associates An Argus Media Company jja@jordan-associates.com www.jordan-associates.com