Methanol Market Growth Propelled by the Rising Demand for Alternative Fuels

The depleting fossil reserves has enticed the world to harness alternatives of energy. In the present scenario, there are a multitude of alternatives that are being researched upon and their commercial aspects are being evaluated. Among these, methanol has emerged as an option that is not only commercially viable but also abundantly available in the Earth's crust Increased energy security,and a rise in demand for production of the energy-efficient vehicles has led to the usage of methanol as an alternative fuel in the global market. According to“International Organization of Motor Vehicle Manufacturers”, the number of motor vehicles produced worldwide is around 95 billion with USA being the largest manufacturer produced 8.5 million vehicles in 2018. With renewed vigor, automobile manufacturers ramped up their efforts for manufacturing vehicles that use alternative fuel. Increasing demand for personal vehicles and subsequent rise in per capita income in the emerging economies such as India and China has led to a remarkable growth of automobile sales in recent years. Increased consumption of methanol by the developed countries owing to rapid industrialization is considered as another key factor for the global methanol market growth. As per the statistics by BP plc, in 2018, fuel consumption grew by an above-average 1.4 million barrels per day, with China (680,000 b/d) being the largest contributors to this growth. The global methanol market valued at $25 billion and is anticipated to grow with a CAGR of 5.6% throughout the forecast period 2019-2025.

With the growth in construction industry and increasing urbanization, there is an increasing demand for methanol derivatives such as formaldehyde which is commonly used in the production of adhesives, which, in turn, is used for plywood manufacturing. There are several other methanol derivatives available in the market such as gasoline, dimethyl ether, acetic acid, methanol to olefins, andmethyl tert-butyl ether. These derivatives are used in the production of coatings, foams, plastics, paints, solvents, and explosives. 

APAC generated approximately 58% of the global revenues in the methanol market in 2018.The methanol market is gaining tremendous revenue due to the huge development in construction, automotive, electronics, and packaging industries. Countries such as India, South Korea, China, and Japan are leading the market owing to the remarkable growth in the industrial sector. Furthermore, the APAC region comprises approximately half of the global methanol market share. And it is also experiencing growth owing to  rise in the demand for supportive investments in various industries such as construction and automobile. Hence, these growth drivers are triggering the demand for methanol market in this region.

In China, the methanol industry was valued at $2.9billion in 2018. Growing demand for methanol-gasoline blends in this region is the key element augmenting the methanol market. Demand for traditional methanol derivatives such as acetic acid and formaldehyde and demand for energy applications such as dimethyl ether usage and direct gasoline blending are the factors driving the methanol market in China.

The application segment that will be creating lucrative opportunities for the methanol market is the energy sector. This application segment is projected to grow at a CAGR of 12% over the forecast period. A rise in demand for methanol in energy applications, such as dimethyl ether (DME) production, and direct gasoline blending process, which in turn, led the market growth for methanol globally. Dimethyl ether is one of the most promising automotive fuel solutions and is anticipated to upsurge the growth, owing to factors such as automotive fuel, electric power generation, and domestic applications.

Methanol Market Growth Drivers

The growing demand for petrochemicals in the APAC region is the key driver that is up heaving the growth of the methanol market. The demand for petrochemical products including vinyl, styrene, benzene, butadiene, toluene, propylene, ethylene xylene, and methanol is high. This is attributed to the increasing adoption of petrochemical products by several industries such as healthcare, plastics, construction, textile, packaging, and transportation. The substantial growth of the petrochemical market is attributable to the growth of the methanol market. 

The lucrative advantages of methanol are its biodegradability and low toxicity. As it is eco-friendly in nature it is preferred over counterparts like gasoline, crude oil, and diesel. Since methanol is biodegradable and miscible in water, there is no accumulation formed when mixed with groundwater, surface water, air, and soil. The aforementioned properties are the reason for the unprecedented endorsement of methanol.  

Methanol is primarily used for the production of heavy chemicals including formaldehyde, acetic acid, methyl tert-butylether. Chemicals such as methylamines, methyl halides, and methyl ethers can be produced using methanol. Moreover, methanol is used as a solvent in automotive industry; antifreeze in pipelines and windshield washer fluid; destaining agent in polyacrylamide gel electrophoresis; and as a fuel in camping and boating stoves. The aforementioned versatile applications of methanol are proliferating the growth of methanol market. 

Methanol is a light flammable liquid that has a high octane rating, low carbon emission, and good blending properties. These properties make methanol an efficient fuel, alternative to diesel and petrol. Growth in the government measures on emission control is driving the adoption of methanol in various industry verticals majorly in the shipping industry. The Indian government is contemplating a 'Methanol Economy Fund' by the National Institution for Transforming India (NITI) Aayog, to promote methanol that could replace 10% of India's crude oil imports by 2030, thereby reducing its fuel bill by around 30%. 

The prominent players in methanol market include Antig Technology Co. Ltd, Atlantic Methanol Production Company, BASF SE, Celanese Corporation, China XLX Fertilizer Ltd., DuPont Fuel Cell, Eastman Chemical Company, Methanex Chile Ltd, Methanol Holdings (Trinidad) Ltd., and SABIC. These companies are continuously focusing on R&D investments, and partnership strategies to gain ground in the global market.

Mergers and acquisitions are the other key strategies adopted by the players to stay ahead of their competitors. Celanese Corporation,a U.S. based global technology and specialty materials’company announced an acquisition of India-based Next Polymers Ltd. Such joint ventures aid the market players to expand their geographical boundaries and accentuate their footprint into the global methanol market.

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