Rapid Urbanization In China To Boost Methanol, Paraxylene Demand

Rapid urbanization in China to boost methanol, paraxylene demand

23-Nov-16

China's rapid urbanization is the key driver of global petrochemical demand at present, while the requirements of its agricultural sector are shrinking as the urbanization absorbs farmland, a key industry leader told the World Clean Coal Conference in Beijing, as per Platts.
Demand for petrochemicals such as methanol and paraxylene are being boosted by urbanization, while that for caustic soda used in aluminum and pulp/paper production and agricultural fertilizers is slowing, the Vice President of the China National Petroleum & Chemical Planning Institute, Bai Yi.

Petrochemical demand for city infrastructure, construction, transport and household goods and appliances was expected to be buoyed by the trend, while traditional industrial and agricultural chemical demand will be adversely affected, she said.

Methanol demand in China is expected to rise by an average 8.8% pa to almost 80 mln mt in 2020 from 52 mln mt in 2015, while PX demand is expected to grow by around 6.6% pa to 28.5 mln mt in 2020, according to a development plan published by China's Ministry of Industry and Information Technology in October. In contrast, demand for nitrogen and phosphate fertilizers is forecast to grow at a tepid 1.2% pa to 50 million mt in 2020 as chemical demand from the agricultural sector plateaus.
Demand for ethylene derivatives will grow 3.6% pa to 48 million mt and propylene derivatives will grow 4.7% pa to 40 million mt over the same period, according to the report. Downstream of the two olefins are polyethylene and polypropylene, two key plastics in household goods. Demand for high-end petrochemicals such as polycarbonates and butyl rubber are expected to grow by a strong 6.7% pa to 2.3 million mt and 9.1% pa to 480,000 mt in 2020 respectively.

China's methanol imports surged 78% year on year to 2.5 million mt in the third quarter, while PX imports rose 7% to 3.2 million mt, according to Chinese customs data. Three new sources -- Trinidad & Tobago, US, and Venezuela -- accounted for 14% or around 920,000 mt of China's methanol imports over the first three quarters of 2016.
The US' ample methanol capacity, at 5.75 million mt/year at the beginning of 2016, tipped the country into being a net exporter this year and is poised to expand further in 2017 with the startup of the 1.75 million mt/year US Gulf Coast Natgasoline plant, according to S&P Global Platts data.
Latin American producers, traditional methanol exporters to the US, would look towards China after the US becomes a net exporter, industry sources said. The Chinese government is looking to tap into methanol from the Americas to help feed its growing demand.
PX demand is expected to grow in the coming years along with China's expanding middle class, but China's domestic PX production capacity is also set to add 10 million mt of new capacity by 2020, industry sources said.