On September 13, an unnamed industry expert voiced strong concerns about the potential consequences of the current surge in domestic methanol development during an interview with reporters. In recent weeks, several experts have raised questions about the raw material supply, environmental impact, and market sustainability of the methanol industry.
Over the past few years, provinces rich in coal and natural gas—such as Shanxi, Henan, Chongqing, Inner Mongolia, Gansu, Ningxia, and Shaanxi—have launched a wave of methanol project construction. Reports on new projects coming online or ramping up production have become common. According to forecasts, at the current pace, China’s annual methanol output could increase by millions of tons. By 2010, the combined capacity of approved and ongoing projects, along with existing plants, is expected to reach 28 million tons, with investments exceeding 50 billion yuan. In just four or five years, China’s total methanol production capacity could grow more than fourfold from current levels.
Many experts warn that the average annual growth rate for methanol as a basic chemical and solvent in China is around 15%. A sudden jump of several million tons per year could lead to overcapacity in downstream markets. While methanol-to-olefins (MTO) is seen as a promising growth area, technical limitations and uncertainties in project implementation remain. Another major use of methanol is as a fuel alternative to gasoline, but opinions within the industry are divided. Some argue that China should avoid developing coal-based methanol or dimethyl ether as vehicle fuels, suggesting that the growth of methanol as a fuel may not accelerate quickly. However, if breakthroughs occur in MTO technology, methanol protein development, or solutions to environmental and safety challenges, methanol consumption could rise significantly. Otherwise, once all the current methanol projects are completed, they may face serious market risks.
Experts are also worried about the economic viability of many existing and under-construction methanol projects. Some companies are chasing short-term profits, using outdated technologies from the 1970s and 1980s. These projects waste valuable resources and risk destabilizing the downstream market. With unclear government policies, such inefficient projects continue to move forward rapidly, raising further concerns about the long-term sustainability of the methanol industry.
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