Methanol Industry 2023- What’s In It For India And Asia?

Methanol (wood alcohol) is an alcohol used as a significant feedstock for producing other chemicals and also as a fuel in the transportation industry. Also known as methyl alcohol, it is even used as a solvent in the pharmaceutical industry. The increasing use of methanol as a renewable energy source is driving the growth of the methanol industry.

Primary Consumers Of Methanol 

The primary consumers of methanol are industries like formaldehyde, acetic acid, pharmaceutical, and methyl tertiary-butyl ether (MTBE). Producers like methyl amine and chloromethane also need methanol.

Growth Of The Methanol Market In India

The methanol market is expected to experience fluctuating growth in the long term, while inflation and supply chain issues will likely persist in 2023. It is estimated that the methanol market will reach over 92,700 kilotons production by 2023, with a projected CAGR of 3.5% during 2023-2028. The COVID-19 pandemic caused a significant reduction in industrial activities in 2020 and the first half of 2021, which affected the growth of the methanol market.

However, the high demand for chemicals in various sectors continues to push the market forward. Rising demand for methanol-based fuels is a significant factor driving the market’s growth. Additionally, the increasing use of methanol in producing olefins using methylated turpentine oil (MTO) contributes to the increase in demand for methanol.

The Market Share Dominator- Asia-Pacific

The Asia-Pacific region is a dominant player in the global methanol market and is projected to continue its leadership during 2023-2028. China, being the largest producer and consumer of methanol, accounts for more than 60% of the world’s total production.

Recently, the country has commissioned a state-of-the-art carbon dioxide-to-methanol facility in Anyang-Henan Province, which is the first commercial-scale facility to produce methanol from captured carbon dioxide gases and hydrogen gases. China’s Ministry of Industry and Information Technology has announced plans to increase the adoption of methanol vehicles and study the potential of green methanol and methanol cars.

Factors Impacting The Methanol Market

Methanol is a significant chemical traded in the Indian market. Economic slowdown, geopolitical conflicts, and the possibility of stagflation are among the factors that may impact the methanol market, and companies will need to be vigilant and forward-thinking. Strategies may vary depending on the country or market, and crude oil prices may also be a concern for the methanol market as they impact fuel and chemical prices.

Methanol Fuel As An Alternative Fuel Option

India anticipates a 30% decrease in fuel costs by 2030. To achieve this, India’s NITI Aayog has come up with an ambitious plan- to cut crude oil imports by 10% by 2030. To make this happen, the country aims to substitute 30 million tons of methanol, which is more cost-effective than gasoline and diesel, for traditional fossil fuels.

Japan, home to several major automotive manufacturers, including Toyota, Suzuki, Kawasaki, Honda, Yamaha, and Nissan plans to develop vehicles that run on methanol fuel. Japan’s National Energy Strategy aims to decrease reliance on gasoline from 50% to 40% by 2030 and improve energy efficiency by 30% by replacing 20% of transportation fuel with alternative options such as methanol. This is expected to further boost the demand and ultimately, it will increase the market growth.

Road Ahead

To maintain growth during such challenging times, it would be better to focus on acquiring new technologies, securing raw materials, improving procurement along with inventory management, and expanding product offerings to related categories. Also, various industries’ dependencies on methanol can be leveraged by Indian manufacturers and suppliers.

Read more: Ethanol Fuel All Set To Revolutionize Automobile Industry By 2025