Covid-19 pandemic has brought global economic growth to a standstill. Global demand for methanol is likely to be affected in 2020 due to the economic slowdown. The current environment is highly challenging for the global methanol industry. Production shutdown and supply chain turmoil have become a common sight impacting the growth of major markets, including China and the US. The demand from traditional chemicals derived from methanol for the construction and automotive sectors is likely to witness a decline due to impaired manufacturing activity.

Russia, Iran, the US, and China are the global hotspots of methanol capacity additions and house most of the upcoming projects. Producers in most of the regions have either reduced operating rates or shut down plants due to weakening demand. Few of them have carried out planned maintenance / turnarounds in advance before the escalation of the pandemic, while others have postponed / delayed turnarounds to get them done effectively and safely in the current environment.

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Figure 1: Key Countries’ Upcoming Methanol Capacity, 2020-2030

Credit: GlobalData Oil & Gas Intelligence Center

Note: Capacity details given above, is only for projects for which capacity is available / reported and the number of projects given also include projects for which capacity is not available / reported

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The outbreak has impacted the progress of some of the methanol projects and the execution / completion of these projects would depend on the duration and severity of the outbreak and could incur additional costs and time. As a result, the construction of South Louisiana Methanol project in St. James Parish was suspended in late April 2020 due to the economic downturn caused by Covid-19 pandemic. Methanex Corp has placed its Geismar 3 project on temporary care and maintenance while deferring capital spending for up to 18 months.

Global methanol industry experiences increasing challenges and uncertain environment, amid disruptions in the supply chain, workforce unavailability, and travel restrictions. Companies continue to evaluate their capital structure to discover further cost-effective investment opportunities, amid lower oil price environment. Producers are trying to navigate this challenging environment and strive to achieve significant long-term growth when global market conditions recover.