C O N T E N T S

METHANOL AND
DERIVATIVES

Acetic Acid

Butanediol

Dimethyl Terephthalate

Methanol

Methyl Tertiary Butyl Ether

Methylene Chloride

Polyacetal
 S&D Outlooks - Methanol and Derivatives
ACETIC ACID
Q4 2018 - Market Review
Supply
EUROPE
The European acetic acid market continued to
re-balance in the fourth quarter of 2018. Previous
production outages had ended around the middle of
the year, and more ample availability was reflected in a
decline in contract and spot prices. However, some
dislocation was apparent in November and December
because of the water levels in the Rhine, which caused a
general logistical crisis. The inability of larger barges to
access river ports constrained supply to some extent.
Demand
EUROPE
Demand for acetic acid in Europe was rather better in
the final quarter. Suppliers at times were surprised at
the vigour of demand, although this may have reflected
a desire to re-stock after the shortages earlier in the
year. It is difficult to gauge how underlying consump-
tion fared, as demand offtake for materials used more in
the warmer months tailed off but demand from the
de-icing sector was probably a tad slow to take off while
mild weather persisted.
Q1 2019 - Market Outlook
Supply
EUROPE
There is finite capacity for acetic acid production, with
no new significant projects on the drawing board for
2019. As those plants that had been out of commission
for part of 2018 are now back up, it is difficult to see
how the existing resources can be stretched much
further. Also, Celanese in the US has just expanded its
vinyl acetate monomer (VAM) capacity and part of its,
unchanged, acetic acid output will presumably be
employed in feeding that increase in downstream
American consumption rather than going directly to
Europe.
Demand
EUROPE
Acetic acid consumption in Europe has been growing
gradually and it is generally expected that this process
will continue, mirroring the evolution of general
economic growth. Many players are a little gloomy
about the economic background in the short-term
future, with the troubles of the German automobile
industry and uncertainty over the US-China trade
dispute clouding earlier optimism.
ASIA
Supply increased following the completion of plant
turnarounds in China, which pressured prices in
December to their lowest levels in more than a year. The
overall operating rate of acetic acid plants increased
seven percentage points to 88% of capacity by early
December.
ASIA
Downward trending upstream methanol values amid
faltering crude futures, coupled with uncertainties on
the macroeconomic front, weighed on market
sentiment, prompting most buyers to adopt a cautious
stance. Demand in India was slow, leading to ample
inventories after Diwali. Depressed pricing in the
downstream ethyl acetate sector in China likewise
weighed on demand.
ASIA
Supply was relatively ample on the back of high output
in China, where the average plant operating rate
hovered at around 80% of capacity. This, coupled with
balanced market conditions outside China and weak
derivatives market performances, may weigh on the
pricing trend, pending the start of the acetic acid plant
turnaround season in March.
ASIA
Demand in China decreased ahead of the Lunar New
Year holidays in early February while bearish sentiment
along the methanol, acetic acid and derivatives value
chain weighed on the overall demand. Production in
the downstream vinyl acetate monomer (VAM) sector in
Asia declined with the shutdown of Sinopec Sichuan
Vinylon’s plant and Celanese’s Singapore-based plant in
January.
US
After seeing tight supply in the first half of 2018, there Increase
was more ample availability of US acetic acid in the
second half of the year. A price drop in late December
marked the fifth decline of the year. All declines took Constant
place in the second half and the latest set a new 2018
low. With BP taking over all acetic acid sales for
Eastman, there was one less marketer.
Decrease
Mixed
US
Weakened demand and further declines in raw
materials brought down US acetic acid export prices in
the final months of 2018. Oilfield demand for acetic acid
was reduced and most food-grade material – essentially
vinegar – has shifted overseas because packaging is so
expensive in the US. Acetic acid prices reached a 10-year
high in June on outages and a force majeure, but after
that values fell on the resolution of plant issues and the
steady decline in oil prices that began in mid-October.
US
In recent years, US acetic acid supply issues have
overshadowed demand in the first quarter, though
there are no plant issues at present. Celanese plans to
expand its acetic acid plant in Clear Lake, Texas, by
140,000 tonnes at some point during the next two
years. The company is planning technology-oriented
process enhancement projects to boost its acetic acid
capacity at the 1.5m tonne/year plant by 2020.
US
Over the past decade January has seen four decreases
and two increases. The price hikes netted out higher
than the drops. But including February and March,
history shows that first-quarter increases have
outnumbered decreases by about a 60-40 margin.
 BUTANEDIOL
Q4 2018 - Market Review
Supply
EUROPE
The quarter started with balanced market conditions
while European producer LyondellBasell conducted
planned maintenance in October. Meanwhile, Rhine
water levels reached historically low measurements,
causing disruption for logistics and production rates to
decrease at some German plants. One European
polybutylene terephthalate (PBT) producer carried out a
scheduled turnaround in November which led to lower
demand towards the end of the year. This, in addition to
healthy European supply and early end of year
de-stocking led to lengthy supply conditions.
Demand
EUROPE
Demand was healthy to begin with and was met by
balanced supply at the start of the fourth quarter.
Demand declined in November when one European
polybutylene terephthalate (PBT) producer conducted
planned maintenance which lasted one month.
Additionally, there were signs of early de-stocking in
November, which surprised some sellers. De-stocking
continued in December, which is typically expected
before Christmas as players reduce inventories in
preparation for the New Year.
Q1 2019 - Market Outlook
Supply
EUROPE
European butanediol (BDO) supply is likely to be
balanced this quarter, with no planned turnarounds
expected. Though demand is expected to increase as
the first quarter progresses, supply conditions were
lengthy in late 2018 and therefore surplus volumes are
likely to be consumed early on in the year as players
prepare for peak demand season in the second quarter.
Demand
EUROPE
An uptick in demand typically takes place in January,
while the end of the first quarter should be fairly busy as
players prepare for peak demand season from the
automotive industry in the second quarter. Rhine water
levels will be watched closely as disruption to logistics
could lead to higher demand, if water levels fall below
average as they did in late 2018.
ASIA
Supply in China fell as several local producers had either
shut their plants for maintenance or were running their
plants at reduced rates amid suppressed butanediol
(BDO) prices due to lacklustre demand. A Taiwanese
producer was operating its plant at reduced rates due to
cost pressure from firm butadiene (BD) prices, although
BD prices has since corrected from its peak. Other
feedstocks such as propylene, propylene oxide (PO) and
maleic anhydride (MA) are also being used by BDO
producers outside China.
ASIA
Demand in Asia weakened in Q4 2018 as buyers
preferred to keep their inventory levels lean with the
approach of the year end. Buying interest for import
cargoes in China was especially subdued due to the
widening gap between domestic and import prices.
Domestic prices had been on a steady downtrend since
mid-2018 amid poor market sentiment. Faltering
demand of downstream polybutylene terephthalate
(PBT) in the year end further suppressed demand for
BDO.
ASIA
Overall supply from Asian producers are expected to
stay largely flat in Q1 2019 as producers are not under
pressure to cut production following the declines in
prices of different feedstock used by various producers
outside China, including BD, propylene and PO.
ASIA
Demand is expected to remain sluggish in January
ahead of the Lunar New Year holiday in early February.
Downstream plants in China and Taiwan will be shut for
at least two weeks from H2 January onwards. Demand
will likely start to pick up only from mid-February at the
earliest.
US
US BDO producers began 2018 with tighter supply but
ended the year with plenty of material. Supply
tightened considerably in the first three quarters of the
year after BASF declared a force majeure in January
because of fire and weather conditions at its plant in
Geismar, Louisiana. The producer lifted that declaration
in early May but maintained a sales control for a few
months. All those issues were resolved by the end of
the third quarter, and the year ended with plenty of
material available.
US
BDO demand remained stable, in line with a generally
healthy US economy, and the lure of the fashion sector
and specifically the yarn-apparel business prompted
Shandong Ruyi, China’s largest textile producer, to move
toward buying US-based INVISTA’s apparel business.
That deal was supposed to have closed by mid-year
2018 but industry sources said the trade war between
the US and China has slowed down the closing.
US
US butanediol (BDO) supply should remain balanced or
possibly even slightly long in early 2019, with no
planned maintenances expected. Buyers say US BDO
supplies are ample, to the point that producers are Increase
seeking more volume from buyers, and there are no raw
material shortages that would prompt production
issues. Constant
Decrease
Mixed
US
January often sees an uptick in demand from the winter
ski season and the end of the first quarter also usually
generates an increase in activity. However, concerns
over the US-China trade war and softening conditions in
the auto sector have tempered expectations for the
American butanediol (BDO) market in 2019.
 DIMETHYL TEREPHTHALATE

Q4 2018 - Market Review

Supply

EUROPE ASIA US

European dimethyl terephtalate (DMT) contracts rely on No Asia Report. No US Report.

a formula with upstream paraxylene (PX) monthly
contract settlements and quarterly methanol prices,
which moved down over the quarter. Methanol supply Increase
initially improved in Q4 2018, but then tightened in
December following a fire at Europe’s largest plant. In
the meantime, the PX market was more balanced Constant
despite remaining structurally short. Low Rhine water
levels also impacted on the supply of both products.
Decrease

Demand Mixed

EUROPE ASIA US

Paraxylene (PX) demand slowed during Q4 2018 on No Asia Report. No US Report.

seasonably lower downstream demand. Demand was
further limited by planned and unplanned shutdowns
at polyethylene terephthalate (PET) and terephthalic
acid (PTA) plants. Methanol demand was healthy
despite logistical issues caused by low water levels on
the river Rhine.

Q1 2019 - Market Outlook

Supply

EUROPE ASIA US

Upstream paraxylene (PX) supply is expected to No Asia Report. No US Report.

improve in Q1 2018. Several production issues are due
to be resolved during the quarter, although the market
will continue to remain structurally short. A structural-
ly-short methanol market is expected be impacted by a
fire at Europe’s largest plant in late December. However,
OCI's BioMCN mothballed plant is expected to reopen.

Demand

EUROPE ASIA US

Demand for upstream methanol and paraxylene (PX) is No Asia Report. No US Report.
expected to be healthy through Q1 2018 after a
seasonal slowdown in December. Demand for European
polyethylene terephthalate (PET) in Q1 2019 may not be
as high as in previous years, if customers have
committed to buying a lot of material out of territory.
 METHANOL
Q4 2018 - Market Review
Supply
EUROPE
Vessel delays into Rotterdam squeezed supply initially;
the authorities stopped a vessel carrying methanol from
Venezuela when cocaine was found during a routine
underwater hull inspection. Flows from Russia resumed
after the World Cup restricted chemical-related
movements. Local European production picked up after
planned Q3 turnarounds at plants including BioMCN’s
Dutch methanol unit. Late December brought news of a
fire at Europe’s largest methanol plant in Norway, with a
timeline unclear about a shutdown for an investigation
and repairs.
Demand
EUROPE
Prices in Europe weakened, dragged down by a drop in
Chinese methanol prices due to falling energy values.
European producers and suppliers maintained that
downstream demand was healthy in spite of the
logistical nightmare brought about by low water levels
on the Rhine river, which thwarted attempts by some to
lift product. Much was dependent on where consumers
were situated. In November, the unusual pull from the
Mediterranean seen earlier in 2018 was likely
dampened by restart at a Libyan plant announced by its
owner.
Q1 2019 - Market Outlook
Supply
EUROPE
A mixed outlook comes for this structurally short
market: backwardated pricing in late December
indicated expectations of lengthening supply through
Q1. However reduced local supply in the near-term
came as fire broke out at Europe’s largest methanol
plant in Norway. The timeline was unclear on a
shutdown for investigation and repairs. OCI's BioMCN
mothballed plant is expected to open.
Demand
EUROPE
Crude oil volatility and Chinese methanol values are
front and centre for many market players. European
demand is mostly expected to be steady and healthy,
though international economic jitters from US trade
aggression with China and the EU will be a concern for
global methanol consumption, especially in China.
ASIA
There was increased spot supply from Iran after a new
plant achieved stable production at the end of the third
quarter. In addition, the US sanctions on Iran came into
full effect in early November but did not have
significant effects in the Asia methanol market,
especially in China and India, the two biggest markets
for Iranian methanol. There were some scheduled and
unscheduled plant shutdowns in southeast Asia in
October but stable production resumed soon after. Any
supply shortfall was filled by Chinese exported
materials. Some Asian buyers also received US-origin
volumes which were from a new plant that started up at
the end of June 2018.
ASIA
Overall demand fell slightly but spot demand plunged
in some places after spot prices fell sharply throughout
most of the quarter. In the key China market, spot
transactions for Iran volumes rose due to increased
availability after a major new plant started up in end
August 2018. In other Asian countries, buyers retreated
from the spot markets due to the steep fall in spot
prices, preferring to just take in term volumes. Some
buyers were heard to even delay their intake of term
cargoes while waiting for prices to bottom out.
ASIA
Supply to the Asia market should remain stable and
ample. Methanol supply could be affected by a
worsening of winter in many countries, especially China
and Iran, but most players were not expecting this to
occur this year. A major Iranian plant might come online
in March, but its volumes should only hit the market in
the second quarter.
ASIA
Market players only expected a likely rebound in
demand to occur after the Lunar New Year celebrations
in early February, with demand in January likely to be
subdued from both the year end lull and lead up to
Lunar New Year. Following that, demand and buyers’
sentiments would likely fluctuate with both upstream
crude futures and downstream olefin prices.
US
US methanol exports began to exceed imports on a
monthly basis in 2018. The milestone began in June,
skipped July and then continued in three of the next
four months, prompted by the start-up of the new plant
in Texas. The steady growth of US domestic methanol
supply has brought a decline in imports from long-time
American methanol source, Trinidad & Tobago.
US
North American methanol contract and spot prices
dropped as expected in the final months of 2018, with
new US capacity at the new 1.8m tonne/year OCI
Natgasoline unit in Texas having some impact. But the
bigger drag on methanol spot and contract prices came
from sinking oil values that started down in October.
Demand remained steady, but crude prices dropped
almost 40% in the last three months of the year, pulling
methanol contracts and spot prices down.
US
Recent trade data shows that 2019 could be the year US Increase
methanol exports exceed imports on an absolute basis.
US October methanol exports (the latest month
available) passed imports for the third month in a row, Constant
stemming from new supply at the 1.8m tonne/year OCI
Natgasoline unit in Beaumont, Texas that started in late
June. Decrease
Mixed
US
The outlook for early 2019 must account for price
history showing a definite tendency toward flat to lower
prices in the January-April period because of weak
winter demand. Price history for the past decade
favoured a flat or down posting for January, as did
happen, and it also shows a high likelihood of a roll or
decline in February, March and April.
 METHYL TERTIARY BUTYL ETHER
Q4 2018 - Market Review
Supply
EUROPE
MTBE was plentiful throughout most of the quarter.
Some tightness was seen as lower Rhine levels
coincided with higher ETBE production at other plants.
This made it difficult to deliver product in Germany and
nearby regions, and to key ARA ports. It is also possible
cold weather conditions in Russia made exports into
Europe less straightforward.
Demand
EUROPE
MTBE demand had been lower in 2018 than 2017, and
Q4 was no exception. This has been due to competition
from alternative components like raffinates. In some
countries east of France and German, increased imports
from Russia have been seen for MTBE and alternative
fossil-fuel-based components. However, a small spike in
demand was seen at the end of the year, which
coincided with supply constraints for some players
using Rhine transport links.
Q1 2019 - Market Outlook
Supply
EUROPE
MTBE supply will likely continue adjusting to stay in line
with demand. Players have reduced MTBE production in
favour of ETBE in recent months, and could continue
doing so as global plus domestic demand for ETBE
grows. If gasoline prices continue to fall, MTBE prices
could also become more attractive, however.
Demand
EUROPE
MTBE demand could continue falling in Q1 2019,
depending on competition with other gasoline
components. However, given that demand fell in 2018,
this drop is not likely to be a sharp one, if it does occur.
MTBE's market share in relation to ETBE is likely to
continue falling across Europe due to increased
mandates. Demand for renewable MTBE, produced from
a mix of fossil and bio-based feedstocks could grow in
key consuming countries like France, but this market is
expected to remain minor over Q1 and 2019.
ASIA
Supply increased since September due to the start-up
of S-oil Residual Fuel Catalytic Cracker (RFCC) at Onsan,
South Korea. The unit gradually reached stable
production in Q4 2018. India's Reliance Industries also
started a MTBE unit in India. The plant started to sell
cargoes to southeast Asia region since Q4 2018 via
three-month term contracts.
ASIA
Demand start to shrink after traditional driving seasons
in September and October. As the north hemisphere
enters the winter season, less consumption of gasoline
is observed. Therefore the use of MTBE as gasoline
additive was curbed. China has increased exports of
finished-grade gasoline, reducing the demand for
blended gasoline in the southeast Asia market.
ASIA
Asia MTBE supply is expected to be stable in Q1 2019.
Under the low crude price scenario, MTBE producers
face uncertainties in the feedstock and product price. As
regional MTBE balance turned to long, producer are
cautious to run the units at high operating rates. There
are also no new capacities coming up in Q1 2019,
except a small 99,000 tonnes/year unit at Haldia, India.
ASIA
MTBE Demand in Q1 2019 is expected to stay stable. As
winter ends in the north hemisphere, there is a seasonal
improvement in the gasoline demand and consump-
tion. However, as countries such as China and Vietnam
continued to promote ethanol blended gasoline, less
MTBE will be used to blend gasoline in these market.
The demand loss induced by policy changes is likely to
net off the seasonal demand recovery.
US
US MTBE supply was steady during the fourth quarter,
with monthly production rates steady at around 1.6m
bbl to 1.8m bbl. Producers did not report any
turnarounds or outages during the quarter, leading to Increase
healthy production levels.
Constant
Decrease
Mixed
US
Demand for US-produced MTBE, which is chiefly
exported to international markets, was robust as global
gasoline consumption was strong. MTBE is added to
gasoline to boost octane levels. Mexico was the top
destination for the oxygenate, with Chile, Venezuela
and Belgium receiving product as well. MTBE was
phased out in the US in favour of corn-based ethanol.
US
US MTBE supply will remain tight as plants are set to run
at capacity for the first quarter. Healthy margins and
strong consumption will keep rates up in the US Gulf
Coast region. No new MTBE production is expected to
start up, while those that are still running will run at full
capacity.
US
Demand for MTBE is expected to remain robust over the
first quarter. Fuel shortages in Mexico and strong
demand from Latin America is expected to persist.
 METHYLENE CHLORIDE
Q4 2018 - Market Review
Supply
EUROPE
European methylene chloride domestic supply rose in
some markets in Q4 as a result of lower export demand.
This was counterbalanced by logistical constraints in
northwest Europe related to low water levels on the
River Rhine and the tight trucking market. Due to lower
seasonal demand during winter, methylene chloride
spot prices fell slightly in Q4.
Demand
EUROPE
European methylene chloride demand was somewhat
lower in Q4. December is traditionally quiet because
buyers need to maintain low stock positions at year end.
Export demand fell late in the quarter due to the
increased availability of alternative material in markets
that Europe exports to.
Q1 2019 - Market Outlook
Supply
EUROPE
It is unclear whether the supply of European methylene
chloride will be long or short in the first quarter.
Eurochlor statistics revealed a decrease in production
for upstream chlorine in early Q4, although co-product
caustic soda prices were stable to soft through the
quarter. Production at several chlorine producers is
expected to resume to normal levels in Q1.
Demand
EUROPE
European methylene chloride demand is forecast to be
somewhat higher in Q1 compared with Q4 due to
re-stocking and increased market activity following the
Christmas holidays. Demand fell in December as players
reduced stocks. There is not expected to be a structural
change to overall consumption in 2019.
ASIA US
Supply was generally improved in the fourth quarter, No US Report.
especially in the key China market, resulting in the
downward-trending prices. Exports from other
northeast Asia countries continued to be tight, due to a
couple of scheduled turnarounds, resulting in a wider
spread between Chinese and non-Chinese export
prices. Most major Chinese plants were able to maintain
stable production with periods where a few plants
suffered from over-inventory. With feedstock methanol
prices falling sharply in this quarter, producers were
able to take advantage by lowering their prices to move
more volumes.
ASIA US
Demand slowed down slightly due to the seasonal No US Report.
year-end lull, but otherwise did not change much.
Demand was also affected by the sharp drop in
feedstock methanol prices, as some buyers delayed
their purchases in the hope that methylene chloride
would fall too. Prices trended downwards generally in
the fourth quarter but that was more to do with a
recovery in supply than the slightly weaker demand. In
India, there was growing buying interest in spot volume
from South Korea after the antidumping duties expired
and were not renewed in October.
ASIA US
Barring unforeseen plant shutdowns, supply should No US Report.
Increase
remain stable throughout the quarter. It might not be
possible for some plants to increase their production,
due to fierce competition for feedstock chlorine from
other downstream sectors such as the polyvinyl Constant
chloride industry. Other plants should maintain high
production rates from last quarter as long as feedstock
methanol prices remained low and margins remained Decrease
healthy.
Mixed
ASIA US
Similarly to some other petrochemical markets, players No US Report.
did not expect significant recovery for methylene
chloride demand till after the Lunar New Year
celebrations at the earliest. On the other hand, market
players did not see any bullish market factor that would
push up demand, given the gloomy outlook for the
global economy.
 POLYACETAL
Q4 2018 - Market Review
Supply
EUROPE
Supply of polyacetal (POM) remained balanced to tight
during October and November and became balanced
during December as a result of seasonally low demand.
Supply re-balanced despite Celanese implementing
sales controls on POM in Europe, Asia and the Americas.
The producer attributed these controls to low water
levels on the river Rhine and and turnarounds at
Celanese and co-supplier POM units.
Demand
EUROPE
Weakening demand from the automotive sector
contributed to lower demand for POM during the final
quarter of 2018, though sources gave mixed views on
the extent of the impact the automotive sector had on
demand for POM. The fourth quarter is also typically a
quieter period with de-stocking and Christmas holidays
impacting demand towards the end of the year.
Q1 2019 - Market Outlook
Supply
EUROPE
European supply of POM is likely to return to a balanced
to tight condition once demand returns to typical levels
following the seasonal lull seen at the end of 2018.
Supply conditions may also be impacted by environ-
mental closures in China, which have the potential to
tighten supply in Asia and restrict volumes available for
export to Europe.
Demand
EUROPE
Demand for POM is likely to increase in the first quarter
of 2019 compared with the seasonally quiet final
quarter of 2018, which was impacted by Christmas
holidays and de-stocking. However, demand for POM
will be influenced by the performance of the key
downstream automotive sector.
ASIA US
Both domestic and import supply were stable quarter No US Report.
on quarter as Chinese and other northeast Asia
producers operated their plants at stable rates. A
Chinese plant that restarted from mothball status in Increase
August continued to operate at only 30-40%. As
feedstock methanol prices dropped sharply in the last
quarter, producers chose to adjust their prices rather Constant
than their operating rates as they could still adjust
healthy margins. Other Asian producers stated that they
were still getting more demand than they could fully
Decrease
supply, despite the downturn in demand.
Mixed
ASIA US
Demand in China fell, partly due to the Golden Week No US Report.
holiday, but largely due to the trade war escalation
between the U.S and China. Demand weakened again
close to the end of the year, with end-users cutting their
purchases in order to maintain low inventories, after
their own operations wind down from the year-end lull.
During the same period, feedstock methanol prices
plunged, allowing polyacetal producers to lower their
prices in response to the wide demand while
maintaining their margins.
ASIA US
Supply is likely to remain stable, as Chinese plants No US Report.
would not increase their operating rates without an
improvement in demand. Other Asian producers had
been operating at near-peak capacity in 2018 and were
likely to continue doing so as margins were still very
healthy.
ASIA US
Chinese buyers will only return for a few weeks before No US Report.
being sidelined again for the Lunar New Year
celebrations. Demand was widely expected to recover
in late February after the festivities, but sentiment could
remain bearish if the trade war between the U.S and
China is ongoing.