Gu Zongqin: The methanol industry is facing a severe and complex development environment

On July 20, Gu Zongqin, chairman of China Nitrogen Fertilizer Industry Association, pointed out at the 2022 China Methanol Industry Conference held in Jinan, Shandong that due to the special properties of methanol products, it is not only a widely used basic chemical raw material, but also an important energy product, so it affects the industry.
There are many development factors, many kinds of contradictions are intertwined, favorable conditions and restrictive factors exert each other, and the environment facing the development of the industry is severe and complex
.

In terms of the international environment, Gu Zongqin analyzed that, first, the fluctuation of international energy prices
.
Second, changes in the international methanol market
.

Since August 2021, under the dual effects of tight supply and strong demand, global natural gas prices have been soaring, which has led to tight coal and oil supplies, and led to record highs in natural gas, coal and crude oil prices
.
Heading into 2022, with the outbreak of the Russian-Ukrainian conflict, the price of Brent crude oil rose above $100 a barrel for the first time in nearly seven years, and the price of natural gas in Europe also hit a record high
.
Since the Russian-Ukrainian conflict, international energy prices, driven by geopolitics as the main force, have further risen, bringing greater uncertainty to the international energy market
.

From the perspective of the industrial chain, the impact of oil and natural gas on the methanol industry mainly comes from the supply side of raw materials
.
There is a competitive relationship of substitution between petroleum route chemicals, oil products and domestic coal via methanol to chemicals and methanol fuels
.
In the future, the international oil supply and demand game will still exist, and the impact on the methanol industry is inevitable
.

In terms of natural gas, the continuous advancement of global energy cleanup and the rapid growth of the world economy will increase the demand for natural gas, which will affect the price of international gas methanol products and their competitiveness in the Chinese market, and will also affect the balance of supply and demand in the domestic market
.

Gu Zongqin pointed out that the geopolitical events in Russia and Ukraine have become one of the dominant factors affecting the international market and have triggered chain changes in trade flows, of which Europe will be the most obvious
.
In the short term, there is no sign of easing the economic sanctions imposed on Russia by Europe, and the methanol exports from Russia to Europe may be blocked and the flow direction will change
.
For Europe itself, the price of natural gas is still at a high level even if it has fallen.
If the high price continues, it will further squeeze the profits of European natural gas-to-methanol plants, which will affect the operating load of the plant and cause the demand gap to expand
.

The average price of methanol in Europe has always been at a high level in the world, and the profit-seeking of methanol cargoes in the Americas, the Middle East and other regions will also become more significant
.
If European and American sanctions on Iran are relaxed, Iranian methanol may also flow to Europe
.
Regarding new plants, the plants that are expected to be put into production this year are very limited, and the new international supply is limited
.
Of course, China is still the world's largest methanol market, and the amount of imported methanol is likely to remain high
.

In terms of the domestic environment, Gu Zongqin said that, first, the dual-carbon goal leads the transformation and upgrading of the industry and high-quality development; second, the high coal price may become the norm
.

Since China proposed the dual carbon goal, the national and local governments have successively issued relevant policies, and control measures have been implemented one after another, especially in terms of energy consumption control
.
In February this year, four departments including the National Development and Reform Commission issued the "Implementation Guidelines for Energy Conservation and Carbon Reduction Transformation and Upgrading in Key Areas of High Energy-consuming Industries (2022 Edition)"
.
The document requires that by 2025, the coal-to-methanol industry will reach 30% of the production capacity above the energy efficiency benchmark level, and the production capacity below the benchmark level will be basically cleared
.

However, in the "Energy Efficiency Benchmark Level and Benchmark Level (2021 Edition)" issued by five departments including the National Development and Reform Commission at the end of last year, the benchmark level and benchmark level for coal-to-methanol is much higher than the current national standard
.
Taking the production of methanol using bituminous coal as raw material as an example, according to the statistics of the China Nitrogen Fertilizer Industry Association, 26.
5% of the existing production capacity has not reached the benchmark level, and only 12% of the production capacity has reached the benchmark level.
great distance
.
The task of reducing energy consumption alone will be a huge challenge for the industry
.

Gu Zongqin pointed out that this year's government work report of the National Two Sessions also mentioned that it is necessary to "resolutely curb the blind development of high-energy-consuming, high-emission, and low-level projects
.
Promote the transition from 'double control' of energy consumption to 'double control' of total carbon emissions and intensity.
"
.
The methanol industry is facing severe green and low-carbon development tasks
.
At the same time, we must also see that in the process of promoting carbon neutralization in an orderly manner in China, the dual-carbon path has gradually become clear
.

Gu Zongqin said that since 2021, due to the increase in international energy prices, and because the growth rate of domestic raw coal production is lower than that of downstream demand, coal supply and demand are in a tight balance, and coal prices are on the rise as a whole.
All-time high
.
With the development of control policies and the growth of coal supply, the price has dropped, but it is still at a historically high level
.

According to statistics, the ex-factory price of gasified bituminous coal was around 1,350 yuan/ton in early July
.
Under the guidance of the dual carbon goals, the number of newly approved coal mine projects across the country has decreased significantly in recent years
.
Since last year, due to rising coal prices, the state has increased production capacity by about 220 million tons.
However, this batch of increased production capacity is a special case in a special period, and considering the continuity of the policy, the space for releasing production is still uncertain
.
However, there is still potential for the growth of national electricity demand.
The current installed capacity and output performance of new energy cannot be satisfied, and the demand for thermal power is still growing
.
At the same time, in the "Guiding Opinions on the High-Quality Development of the Coal Industry during the 14th Five-Year Plan" issued by the China Coal Industry Association, it is proposed that by the end of the "14th Five-Year Plan", the domestic coal output will be controlled at about 4.
1 billion tons, and the national coal consumption will be 42%.
About 100 million tons, with an average annual consumption growth of about 1%
.
Taken together, coal prices will likely remain high when coal supplies are tight
.