MOSCOW (MRC) -- A permanent lifting of sanctions against Iran could accelerate Iranian methanol capacity by an additional 10 million metric tons (MMT) by 2025, as per Hydrocarbonprocessing with reference to the global consultancy IHS' new report.
Already a major producer of methanol, Iran currently produces 5 MMT of methanol annually, which represents nearly 5% of global methanol capacity.
A full repeal of sanctions would also open up a large volume of methanol supply to global markets within the next five years, reducing the country's dependence on the Indian and Chinese markets for its exports, the IHS report said.
"Iran has proposed projects totaling more than 20 MMT of new methanol capacity, but a more realistic figure of approximately 10 MMT could be added by 2025, if and when the sanctions are lifted," said Mike Nash, global director of syngas chemicals at IHS Chemical.
Methanol is a key commodity and an integral part of the global economy. Traditionally, it has been a chemical feedstock consumed in the manufacture of derivatives essential to the production of consumer goods as diverse as plastic bottles, polyester fibers, paints, adhesive, inks, pharmaceuticals, herbicides and cigarette filters.
However, methanol is also increasingly being used in energy applications, with the most significant application as a direct gasoline blendstock. China leads global market demand for gasoline blending, but other countries such as Israel, Australia, Thailand, Iran, Iceland, Azerbaijan and Uzbekistan also use methanol for gasoline blending.
According to IHS Chemical, in 2015, total global methanol demand is expected to reach 70 MMT, driven in large part by the resurgence of construction and automotive markets, and increased demand for cleaner energy.
Before the imposition of sanctions on Iran, the country tended to function as a classic swing producer, selling methanol on a spot basis to maximize the short-term netbacks; this resulted in minimal regional price differentials. Iran was a major supplier of petrochemicals to Europe - primarily ethylene, polyethylene (PE) and methanol.
However, after the imposition of the sanctions, business with Europe and several countries in Asia virtually disappeared and export volumes from Iran were redirected to China and India as well as a few other countries in Asia and Middle East. Iran was restricted to selling all of its output to a limited number of markets, with regional spot prices much lower than in other countries.
According to IHS Chemical analysis, in 2014, Iran exported 2.9 MMT of methanol, with 60% of its exports going to China and 29% to India. IHS estimates that more than 100 thousand metric tons (TMT) of methanol are currently imported into Europe from Iran.
"In the short-term, after the sanctions are lifted, Iran will likely re-kindle its relationships with Korea, Japan and Italy," Nash said. "And with the door to the West reopened, Iranian producers can choose the highest-priced market to sell Iran’s new 10 MMT methanol capacity, which will lead to a greater convergence of regional pricing."
We remind that, as MRC reported earlier, currently number of active Iranian Petrochemical complexes are 53, with total production capacity of 59 million metric ton, producing range of polymers, chemicals, aromatics & liquid gas, located mainly at Iranian south region, next to Persian Gulf, called Assaluyeh and Mahshahr Special Economic Zones.
At the moment, there are 67 developments projects in the country which are under construction, adding 61 million metric ton on total production and estimated to fully run till 2018.
MRC