09.04.15
In a new report, IHS Inc. (NYSE: IHS), the leading global source of critical information and insight, today announced that a permanent lifting of sanctions against Iran could accelerate Iranian methanol capacity by an additional 10 million metric tons (MMT) by 2025. Already a major producer of methanol, Iran currently produces 5 MMT of methanol annually, which represents nearly 5 percent of global methanol capacity.
A full repeal of sanctions would also open up a large volume of methanol supply to global markets within the next five years, reducing the country's dependence on the Indian and Chinese markets for its exports, the IHS report said.
“Iran has proposed projects totaling more than 20 MMT of new methanol capacity, but a more realistic figure of approximately 10 MMT could be added by 2025, if and when the sanctions are lifted,” said Mike Nash, global director of syngas chemicals at IHS Chemical.
The Iranian methanol outlook and other topics will be discussed in detail by IHS experts at the 33rd annual World Methanol Conference in Munich, 10-12 November 2015.
Methanol is a key commodity and an integral part of the global economy. Traditionally, it has been a chemical feedstock consumed in the manufacture of derivatives essential to the production of consumer goods as diverse as plastic bottles, polyester fibers, paints, adhesive, inks, pharmaceuticals, herbicides and cigarette filters.
However, methanol is also increasingly being used in energy applications, with the most significant application as a direct gasoline blendstock. China leads global market demand for gasoline blending, but other countries such as Israel, Australia, Thailand, Iran, Iceland, Azerbaijan and Uzbekistan also use methanol for gasoline blending.
According to IHS Chemical, in 2015, total global methanol demand is expected to reach 70 MMT, driven in large part by the resurgence of construction and automotive markets, and increased demand for cleaner energy.
Before the imposition of sanctions on Iran, the country tended to function as a classic swing producer, selling methanol on a spot basis to maximize the short-term netbacks; this resulted in minimal regional price differentials. Iran was a major supplier of petrochemicals to Europe - primarily ethylene, polyethylene (PE) and methanol.
However, after the imposition of the sanctions, business with Europe and several countries in Asia virtually disappeared and export volumes from Iran were redirected to China and India as well as a few other countries in Asia and Middle East. Iran was restricted to selling all of its output to a limited number of markets, with regional spot prices much lower than in other countries.
According to IHS Chemical analysis, in 2014, Iran exported 2.9 MMT of methanol, with 60 percent of its exports going to China and 29 percent to India. IHS estimates that more than 100 thousand metric tons (TMT) of methanol are currently imported into Europe from Iran.
“In the short-term, after the sanctions are lifted, Iran will likely re-kindle its relationships with Korea, Japan and Italy,” Nash said. “And with the door to the West reopened, Iranian producers can choose the highest-priced market to sell Iran’s new 10 MMT methanol capacity, which will lead to a greater convergence of regional pricing.”
A longer-term impact of any permanent lifting of sanctions to accelerate Iranian methanol capacity expansion plans would require access to feedstock, making it heavily dependent on the growth of the Iranian gas industry, especially on supplies of natural gas, primarily from the South Pars gas field.
The Iranian petrochemical industry, while quite diverse, is primarily focused on exploiting the country’s vast resources of ethane-rich natural gas. The much larger impact of sanctions resulted from the inability of the country to maintain and invest sufficiently in its oil/gas and petrochemical feedstock and export infrastructure. This has led to chronically low capacity utilization rates; not least due to periodic shortages in ethane feedstock.
Methanol producers in Iran enjoy very advantageous production costs. The cost advantage of methanol production from Iranian natural gas is depicted on the adjacent cost curves for the years 2015 and 2019. IHS Chemical forecasts that the higher oil price forecasted for 2019 would further enhance Iran’s position on the curve.
According to the IHS Chemical Crude Oil Turmoil and the Global Impact on Petrochemicals Special Report assessing the potential implications of possible recovery trajectories for crude oil prices, a prolonged oil price recovery would dramatically impact future investment plans as chemical producers adjust to the shifting feedstock dynamics. While methanol capacity additions will still occur in locations with advantaged feedstocks, such as in the Middle East and the United States, the speed of these additions would be significantly delayed, and rationalizations also would be likely.
According to IHS Economics and Country Risk analysts, it is unlikely that there will be any changes to the Iranian sanctions situation in 2015.
To view the current agenda for the 33rd Annual IHS World Methanol Conference, and to register for the event or training workshop, please visit https://www.ihs.com/events/world-methanol-conference-2015/register.html. To speak with Mike Nash, contact melissa.manning@ihs.com.
Early-bird registration for the conference is U.S. $1,400 per registrant if paid by 18 September 2015. After that date, registration is U.S. $1,700. In conjunction with the IHS 33rd Annual IHS World Methanol Conference, IHS Chemical is offering a full day Training Workshop: Introduction to Methanol on 10th October. Registration for the Training Workshop is U.S. $1,495. Group rates are available.
A full repeal of sanctions would also open up a large volume of methanol supply to global markets within the next five years, reducing the country's dependence on the Indian and Chinese markets for its exports, the IHS report said.
“Iran has proposed projects totaling more than 20 MMT of new methanol capacity, but a more realistic figure of approximately 10 MMT could be added by 2025, if and when the sanctions are lifted,” said Mike Nash, global director of syngas chemicals at IHS Chemical.
The Iranian methanol outlook and other topics will be discussed in detail by IHS experts at the 33rd annual World Methanol Conference in Munich, 10-12 November 2015.
Methanol is a key commodity and an integral part of the global economy. Traditionally, it has been a chemical feedstock consumed in the manufacture of derivatives essential to the production of consumer goods as diverse as plastic bottles, polyester fibers, paints, adhesive, inks, pharmaceuticals, herbicides and cigarette filters.
However, methanol is also increasingly being used in energy applications, with the most significant application as a direct gasoline blendstock. China leads global market demand for gasoline blending, but other countries such as Israel, Australia, Thailand, Iran, Iceland, Azerbaijan and Uzbekistan also use methanol for gasoline blending.
According to IHS Chemical, in 2015, total global methanol demand is expected to reach 70 MMT, driven in large part by the resurgence of construction and automotive markets, and increased demand for cleaner energy.
Before the imposition of sanctions on Iran, the country tended to function as a classic swing producer, selling methanol on a spot basis to maximize the short-term netbacks; this resulted in minimal regional price differentials. Iran was a major supplier of petrochemicals to Europe - primarily ethylene, polyethylene (PE) and methanol.
However, after the imposition of the sanctions, business with Europe and several countries in Asia virtually disappeared and export volumes from Iran were redirected to China and India as well as a few other countries in Asia and Middle East. Iran was restricted to selling all of its output to a limited number of markets, with regional spot prices much lower than in other countries.
According to IHS Chemical analysis, in 2014, Iran exported 2.9 MMT of methanol, with 60 percent of its exports going to China and 29 percent to India. IHS estimates that more than 100 thousand metric tons (TMT) of methanol are currently imported into Europe from Iran.
“In the short-term, after the sanctions are lifted, Iran will likely re-kindle its relationships with Korea, Japan and Italy,” Nash said. “And with the door to the West reopened, Iranian producers can choose the highest-priced market to sell Iran’s new 10 MMT methanol capacity, which will lead to a greater convergence of regional pricing.”
A longer-term impact of any permanent lifting of sanctions to accelerate Iranian methanol capacity expansion plans would require access to feedstock, making it heavily dependent on the growth of the Iranian gas industry, especially on supplies of natural gas, primarily from the South Pars gas field.
The Iranian petrochemical industry, while quite diverse, is primarily focused on exploiting the country’s vast resources of ethane-rich natural gas. The much larger impact of sanctions resulted from the inability of the country to maintain and invest sufficiently in its oil/gas and petrochemical feedstock and export infrastructure. This has led to chronically low capacity utilization rates; not least due to periodic shortages in ethane feedstock.
Methanol producers in Iran enjoy very advantageous production costs. The cost advantage of methanol production from Iranian natural gas is depicted on the adjacent cost curves for the years 2015 and 2019. IHS Chemical forecasts that the higher oil price forecasted for 2019 would further enhance Iran’s position on the curve.
According to the IHS Chemical Crude Oil Turmoil and the Global Impact on Petrochemicals Special Report assessing the potential implications of possible recovery trajectories for crude oil prices, a prolonged oil price recovery would dramatically impact future investment plans as chemical producers adjust to the shifting feedstock dynamics. While methanol capacity additions will still occur in locations with advantaged feedstocks, such as in the Middle East and the United States, the speed of these additions would be significantly delayed, and rationalizations also would be likely.
According to IHS Economics and Country Risk analysts, it is unlikely that there will be any changes to the Iranian sanctions situation in 2015.
To view the current agenda for the 33rd Annual IHS World Methanol Conference, and to register for the event or training workshop, please visit https://www.ihs.com/events/world-methanol-conference-2015/register.html. To speak with Mike Nash, contact melissa.manning@ihs.com.
Early-bird registration for the conference is U.S. $1,400 per registrant if paid by 18 September 2015. After that date, registration is U.S. $1,700. In conjunction with the IHS 33rd Annual IHS World Methanol Conference, IHS Chemical is offering a full day Training Workshop: Introduction to Methanol on 10th October. Registration for the Training Workshop is U.S. $1,495. Group rates are available.
