Methanol overcapacity in China expected to ease

China’s methanol industry has reached severe overcapacity, but the situation is expected to ease over the next five years. How much the methanol industry recovers will depend on the pace of new plant construction in the Middle East. The low cost of natural gas feedstock in the Middle East means it is more competitive than China.  Methanol, which is mostly derived from coal and natural gas, is used in manufacturing textile, electronics and furniture; emerging as an alternative clean-burning fuel that can be used on its own or mixed with conventional petrol. Methanol demand in China has increased 20% annually over the last 10 years, while capacity has increased by 28%, resulting in the current overcapacity. (June 20, 2011)