Methanol de­mand down and ex­pected to fall fur­ther

Prairie Post (West Edition) - - Alberta -

Methanex, which has a plant in Medicine Hat, says global de­mand for methanol de­clined seven per cent in early 2020, but it ex­pects steeper de­cline in the spring as global trade slows and the price of crude oil re­mains low.

The global pro­ducer that has ma­jor man­u­fac­tur­ing fa­cil­ity in Medicine Hat re­ported in its first-quar­ter fi­nan­cial state­ments on May 6 that it ex­pects un­pre­dictable con­di­tions to worsen be­fore they im­prove.

“We are nav­i­gat­ing ex­tra­or­di­nary times as the COVID-19 pan­demic has cre­ated un­prece­dented tur­moil and uncer­tainty in peo­ple’s lives and the global econ­omy,” stated CEO John Floren, adding that at this point global sup­ply chains and eco­nomic ac­tiv­ity, while af­fected, ap­pear to be op­er­at­ing well.

In April, the com­pany idled two of its plant sites in Chile and Trinidad, and de­layed US$500 mil­lion in cap­i­tal spend­ing on a planned ex­pan­sion at the com­pany’s fa­cil­i­ties in Louisiana.

Pro­duc­tion in Medicine Hat re­mained near full ca­pac­ity.

The com­pany is how­ever, “plan­ning for a wide range of sce­nar­ios, in­clud­ing ones in which we see a deeper and more pro­longed re­duc­tion in methanol de­mand and low prices.”

Methanol is used in chem­i­cal and plas­tics pro­duc­tion, as a sol­vent and fuel al­ter­na­tive to gaso­line. Low oil prices bring down the cost ad­van­tage of methanol over tra­di­tional fu­els, and also af­fects oil ex­plo­ration which in re­verse ef­fects the price of nat­u­ral gas, in­creas­ing feed­stock costs for methanol pro­duc­ers.

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