Coal to Methanol, the Best Route for New Energy?

China's ever mostly boosted chemical - methanol, also reported year-over-year declines both in production and price in November, ending the increases for dozen consecutive months. According to the latest report from China's National Bureau of Statistics, China produced 837.8 thousand tons of methanol in November, a decline of 9.55% year over year, falling 16.96% from the preceding month. Its quoted prices were between RMB1 950/t and RMB2 500/t in early December, substantially dropped from October's RMB3 200/t and RMB3 700/t.
   In spite of the fast decline, many players kept cheer on the methanol business, according to the Asia Methanol & Derivatives Summit held by ASIACHEM Consulting November 27th-28th in Nanjing, Jiangsu province.
    Mr. Guillaume Lesage, Total Petrochemicals China shared in his presentation Coal-to-Polymers in China that China has opportunities due to abundant coal feedstock, high demand for polymers in a fast growing market, fitting well with the economic development of western regions and relieving the railway network by moving higher value added products although there are many challenges such as the limited water resource and carbon dioxide management.
   It is the fact that the common coal conversion produces carbon dioxide but coal to methanol, dimethyl ether and other derivatives can effectively reduces the carbon emissions. Professor George A. Olah of University of Southern thinks this routine can replace capturing and storing of carbon. He does not believe human being will face a real energy crisis but believes that eventually human being will also be able to use the air to chemically recycle its carbon dioxide content and produce methanol.
   Mr. Zou Benzhen, ENN Group actively promotes his viewpoint at the summit that China should develop coal to monoethylene glycol (MEG) projects. He predicted China's demand on MEG will be 10 million tons in 2013, exceeding local supply by 4 million tons. In addition, the MEG projects with a capacity under 200 000 t/a basis on olefins is not favored by the government. In economic aspect, compared with oil basis, coal to MEG costs less. "Low carbonic products will be the main energy alternatives in post petroleum oil time," Zou commented in his speaking. "Companies that can solve the clean coal technology totally will emerge as winners in the whole 21st century."
    "Newly added methanol capacity globally during 2007- 2010 is predicted to be 29.13 million t/a," shared Mr. Liu Yanwei, China National Petroleum and Chemical Planning Institute. "China will contribute 16.73 million t/a. The pressure from new capacity, in addition to the pass of boom period of chemical industry, will force the methanol price dropping down in the period and bring more risk to investment return in this industry."  

Zhong Weike
December 18th, 2008