The Industrial benefits, analysis and growth of Methanol market

The demand for methanol in various sectors including adhesives, paints, transport fuels and plastics has resulted in the growth of the methanol market globally. The methanol market in the coming years is expected to grow at a CAGR of 11.81% until 2025. The trade flow might experience a shift due to the entry of Iranian methanol and expansion of production in the U.S. Also, the highest growth rate in methanol market is seen in China and U.S. because of the developments in shale gas.

What is methanol and how it is used?

Methanol is a light liquid which is flammable and can be used in producing gas or other renewable sources of energy like biomass. Due to its excellent blending properties and high-octane rating, it is a good choice to use as an alternative fuel for transportation. By derivative, the methanol market is segmented into its various forms including acetic acid, methanol, formaldehyde, olefins, solvents, dimethyl ether, and gasoline. Globally the top three markets for methanol are segmented into formaldehyde, acetic acid, and dimethyl ether. Out of these, the largest application is of formaldehyde. It is used in numerous industries like paints, explosives, plastics, and plywood.

Gasoline, when blended with methanol, can be used to enhance engine performance and give better fuel efficiency. The demand for methanol is expected to increase in the next six years because of these reasons.

Size of the Methanol Market

As 10% of China’s methanol demand is met through imports, China is the top player in the methanol market region wise. Till 2025, the methanol market is expected to grow at a CAGR of 11.81%. The Middle East is strengthening its position as a leading methanol supplier, capacity surge is expected to be witnessed in the Middle East and the U.S.  The methanol market is primarily driven by an increase in demand for methanol to olefins in China with the acceptance of the MTO technology which has evolved due to the increase in demand for petrochemicals in Asia Pacific.

Reasons for the growth of Methanol Market

Methanol has widespread use in various industries including transport fuel, paints, explosives, adhesives, plywood etc. The formaldehyde segment has witnessed incredible growth due to its varied applications in automotive, construction healthcare and personal care. The key drivers for the growth of the methanol market are:

• Increased use in automobiles: Due to the need to reduce carbon emissions, the use of methanol as a fuel has increased thus increasing its production. The growth of the methanol market is also driven as methanol in automobiles improves engine performance and fuel efficiency.
• Increased use in construction: Formaldehyde-based resins are employed in the production of composites and wood products. The methanol market has grown with an increase in residential and commercial construction activities, improved standards of living and an increase in income.
• Demand from conventional markets: The strong demand from conventional sector including adhesives, paints, and plastics has also resulted in rapid growth of the methanol market.

Also, with depletion in crude oil, the demand for methanol as a fuel has increased.

Top players in the market

The leading players in the methanol market are Mitsubishi Gas Chemical Company Inc. (Japan), Mitsui & Co. Ltd. (Japan), BASF SE (Germany), and Solventis (UK). These leading companies are investing time and resources in developing cost-efficient techniques in the production of methanol. This therefore also helps in meeting the rising demand for methanol due to its varied applications. Leading suppliers are also making alliances and joint ventures as growth strategies.

Market trends and region wise market growth

The Asia Pacific region is the largest manufacturer of methanol due to low labor costs and less number of environmental regulations. The growth in Asia Pacific is also due to the rapid growth of the automotive industry in countries like India and China. Due to its cost-effectiveness, methanol is being used in heavy vehicles such as buses and trucks.

The European market, however, has shown a sluggish growth due to a shortage of raw materials and has resulted in a 10% increase in price. But it is still expected to grow due to expanding health care industries.

North America is a top market due to increase in water treatment plants. Many water treatment plants are using methanol in the denitrification process.

Methanol is also expected to compete with naphtha as a feed stock for the production of ethylene and propylene through MTO. Chinese market and crude oil are the major drivers of the methanol market as crude oil is a proxy feedstock for ethanol.