Methanol supply continues to be tight in Europe
The European methanol market is expected to remain supply-tight for the remainder of 2024 due to ongoing supply disruptions in the U.S., Europe and the Middle East, participants at the European Petrochemicals Association (EPCA) annual conference in Berlin said. The demand outlook is mixed as the economic environment in Europe improves.
European methanol supply is tight. On the one hand Equinor’s Norwegian project shutdown for maintenance lasted longer than expected, and supply disruptions at a number of units in Western Europe and the Middle East. This led to an increased reliance on US imports in Europe. As a result, the European methanol market has become more sensitive to plant operations in the US. Examples include the ongoing shutdown of the Natgasoline methanol plant in Texas and logistical problems at major US ports earlier this year.
Natural gas issues also continue to plague European methanol supplies, with OCI’s 1 million mt/year methanol plant in Delfzijl, the Netherlands, shut down since 2023 due to natural gas prices. Messenius’ methanol plant in Damietta, Egypt, also reduced its operating load in the second and third quarters of 2024 due to gas supply issues. However, one producer said that cheaper natural gas prices in the U.S. Exacerbates the imbalance between the U.S. and European methanol markets. Makes it more attractive for Europe to import U.S. methanol.
As a result, the European methanol market is expected to remain tight for the remainder of 2024. and may continue into the first quarter of 2025. While tight supply has led to higher prices, so far, high inventories have limited further price increases as they have helped downstream to cope with supply disruptions. If demand is better and supply decreases, methanol market prices will naturally rise.
Sentiment in the methanol market is mixed going into 2025. Some see the market improving in the first half of 2025. Others, on the other hand, do not expect substantial improvement until the second half of the year.