Methanol Market Size, Share, Growth & Industry Analysis, By Feedstock (Natural Gas, Coal, Biomass & Renewables), By Derivative (Formaldehyde, Acetic Acid, Methyl Tertiary Butyl Ether (MTBE), Dimethyl Ether (DME), Biodiesel, MTO/MTP, Solvent, Others), By Application and Regional Analysis, 2024-2031

Methanol Market Size

The global methanol market size was valued at USD 39.09 billion in 2023 and is projected to grow from USD 40.67 billion in 2024 to USD 55.41 billion by 2031, exhibiting a CAGR of 4.52% during the forecast period. The adoption of methanol as a cleaner alternative to conventional fuels is contributing to the growth of the market.

Methanol's ability to reduce carbon emissions in transportation and marine industries is drawing attention from key sectors seeking to comply with stringent environmental regulations. Furthermore, its use in fuel blending and energy production offers a cost-effective solution compared to other biofuels.

In the scope of work, the report includes products offered by companies such as Methanex Corporation, HELM AG, SABIC, MITSUBISHI GAS CHEMICAL COMPANY, INC, MITSUI & CO., LTD., Celanese Corporation, BASF, PETRONAS Chemicals Group Berhad, LyondellBasell Industries Holdings B.V., ZPCIR, and others.

The construction and automotive sectors are witnessing significant growth, driving the demand for methanol-based derivatives used in adhesives, plastics, and coatings. With the global shift toward advanced manufacturing and industrialization, the expansion of the methanol market is being supported by rising investments in chemical production facilities.

Methanol, also known as methyl alcohol, is the simplest alcohol with the chemical formula CH₃OH. It is a colorless, volatile, and flammable liquid characterized by a mild alcoholic odor.

Methanol is widely recognized for its versatility as a fuel, solvent, and chemical feedstock. Industrially, it is produced by combining carbon monoxide and hydrogen through a catalytic process, primarily from natural gas. Methanol plays a crucial role in various industries, including automotive, petrochemicals, and energy storage.

While essential, it is highly toxic and requires careful handling. Its adoption in sustainable applications, such as green methanol production, is growing due to its environmental benefits.

Analyst’s Review

Growing environmental awareness and the global shift toward decarbonization are propelling significant investments in green methanol production, establishing it as a pivotal driver for the expansion of the methanol market.

Companies are increasingly utilizing innovative methods, such as leveraging waste biomass and renewable energy sources, to synthesize methanol sustainably. This trend aligns with global net-zero carbon goals, prompting governments and industries to implement supportive policies and develop robust infrastructure for green methanol projects. Partnerships and collaborations are accelerating commercialization efforts, with large-scale initiatives gaining traction.

• In May 2024, Sumitomo SHI FW (SFW) signed an agreement with Capwatt to provide Front-End Engineering Design (FEED) services for the Mangualde Renewable Methanol project in Portugal. This groundbreaking initiative aims to establish a biorefinery capable of producing 80,000 tons of renewable methanol annually.

By utilizing locally sourced biomass residues and renewable electricity from an adjacent photovoltaic solar park, the project highlights the innovative technologies and strategic collaborations that are driving sustainable methanol production. Such advancements underscore the growing relevance of environmentally friendly methanol solutions, further enhancing market growth prospects.

Methanol Market Growth Factors

Methanol plays a crucial role as a feedstock in the production of vital petrochemicals such as formaldehyde, acetic acid, and olefins. The construction and automotive sectors are witnessing significant growth, driving the demand for methanol-based derivatives used in adhesives, plastics, and coatings.

• According to European Automobile Manufacturers' Association (ACEA) data from 2023, global car production reached 76 million units, marking a significant growth of 10.2%. Additionally, global new car sales experienced an increase of nearly 10%, rebounding strongly after a period of stability in 2022.

With the global shift toward advanced manufacturing and industrialization, the expansion of the methanol market is being supported by rising investments in chemical production facilities. Companies are also focusing on process innovations to maximize methanol utilization, ensuring its sustained demand in various downstream applications.

The integration of advanced carbon capture and utilization (CCU) technologies is enhancing methanol production capabilities, contributing to the growth of the market. Companies are increasingly using captured carbon dioxide and green hydrogen to produce e-methanol, aligning with sustainability goals. This approach is reducing the environmental footprint of methanol production while meeting growing industrial requirements.

Stringent regulations surrounding methanol production and usage, particularly concerning greenhouse gas (GHG) emissions and toxicity, are restraining market growth. Compliance with these regulations increases operational costs and creates barriers for smaller manufacturers.

Additionally, the environmental impact of traditional methanol production methods, which rely on natural gas or coal, poses sustainability challenges. To address these issues, companies are investing in green methanol technologies, utilizing renewable feedstock such as biomass and CO2.

Partnerships with research institutions and governments are fostering innovation in low-carbon production methods. Firms are also adopting carbon capture and utilization systems to reduce emissions, ensuring compliance and driving sustainable growth.

Methanol Industry Trends

The use of renewable energy sources in methanol production processes is facilitating the expansion of the methanol market. Green methanol, derived from biomass, solar, and wind energy, is gaining traction due to its potential to significantly reduce GHG emissions.

Renewable methanol is being promoted as a sustainable solution in various industries, including transportation and energy storage. Initiatives by governments to adopt renewable energy targets and incentives for green fuel production are encouraging large-scale adoption.

• The updated Renewable Energy Directive in 2023 has elevated the EU's binding renewable energy target for 2030 to at least 42.5%, up from the earlier goal of 32%, with an ambitious aim to achieve 45%. This represents a near doubling of the current share of renewable energy across the EU. The directive officially came into effect in all EU member states on November 20, 2023.

Methanol's versatility as an energy carrier is gaining recognition in energy storage and fuel cell applications, contributing to the growth of the methanol market. Its ability to store and transport energy efficiently makes it a viable solution for addressing intermittent energy supply challenges in renewable energy systems.

The growing demand for reliable and clean energy storage in residential, commercial, and industrial sectors is boosting the adoption of methanol.

Segmentation Analysis

The global market is segmented based on feedstock, derivative, application, and geography.

By Feedstock

Based on feedstock, the market is segmented into natural gas, coal, and biomass & renewables. The natural gas segment led the methanol market in 2023, reaching the valuation of USD 15.51 billion. Natural gas serves as a cost-effective and efficient raw material for methanol production, enabling manufacturers to optimize their operational margins.

Its global availability ensures a reliable supply chain, reducing dependency on geographically concentrated resources. Moreover, the production of methanol from natural gas generates fewer greenhouse gas emissions, aligning with stringent environmental regulations.

By Derivative

Based on derivative, the market is classified into formaldehyde, acetic acid, methyl tertiary butyl ether (MTBE), dimethyl ether (DME), biodiesel, MTO/MTP, solvent, and others. The formaldehyde segment secured the largest revenue share of 22.00% in 2023.

Formaldehyde is a critical raw material in producing resins, adhesives, and construction materials, including plywood, particleboard, and insulation products. The construction and furniture industries, particularly in emerging economies, are experiencing steady growth, driving the demand for methanol-derived formaldehyde.

Additionally, the automotive sector relies on formaldehyde-based components, such as coatings and moldings, to enhance vehicle durability and performance. Its cost-effectiveness and adaptability make it indispensable for manufacturing processes.

By Application

Based on application, the market is divided into construction, automotive, pharmaceuticals, electronics, chemical, and others. The chemical segment is poised for significant growth at a robust CAGR of 5.08% through the forecast period. due to its extensive use as a feedstock in manufacturing various industrial chemicals.

Methanol is a key raw material for producing formaldehyde, acetic acid, and methyl tert-butyl ether (MTBE), which are integral to the construction, automotive, and consumer goods industries. The rising demand for adhesives, resins, and coatings, particularly in the construction and furniture sectors, further strengthens the chemical segment’s position.

Methanol Market Regional Analysis

Based on region, the global market is classified into North America, Europe, Asia Pacific, Middle East & Africa, and Latin America.

Asia Pacific accounted for 34.32% share of the global methanol market in 2023, with a valuation of USD 13.42 billion. Rapid industrialization and urbanization in countries like China, India, and Southeast Asian nations are driving significant demand for methanol.

• The United Nations Human Settlements Programme reports that Asia is home to over 54% of the global urban population, equating to more than 2.2 billion people. By 2050, the region’s urban population is projected to expand by an additional 1.2 billion, reflecting a 50% increase.

The chemical's versatility as a feedstock for petrochemicals, such as formaldehyde and acetic acid, is meeting the rising needs of construction, automotive, and consumer goods industries. Expanding manufacturing activities and infrastructure projects are further contributing to the growth of the market in the region.

Supportive government policies, such as India’s Methanol Economy Program and China’s Clean Energy Action Plan, are catalyzing market growth in the region. These initiatives promote methanol's use in transportation, power generation, and industrial applications. Investments in infrastructure, research, and technology for methanol production are further accelerating its adoption in Asia Pacific.

The market in Europe is poised for significant growth at a robust CAGR of 4.47% over the forecast period. Europe’s strong commitment to decarbonization and renewable energy is significantly driving the methanol market.

Green methanol, produced from biomass and renewable hydrogen, aligns with the EU’s ambitious climate goals, including achieving carbon neutrality by 2050. Policies like the updated Renewable Energy Directive, which raised renewable energy targets to 42.5% by 2030, are encouraging the adoption of green methanol in transportation and industry.

Investments in innovative production technologies and large-scale green methanol projects, supported by governments and private entities, are accelerating market growth across the region.

The maritime sector’s shift toward low-carbon fuels is bolstering the demand for methanol in Europe. Methanol’s potential as a clean-burning marine fuel, compliant with International Maritime Organization (IMO) regulations, makes it an attractive option for reducing sulfur emissions. European shipping companies are actively transitioning to methanol-powered vessels, driven by environmental mandates and operational efficiency.

Competitive Landscape

The global methanol market report will provide valuable insights with an emphasis on the fragmented nature of the market. Prominent players are focusing on several key business strategies such as partnerships, mergers and acquisitions, product innovations, and joint ventures to expand their product portfolio and increase their market shares across different regions.

Strategic initiatives, including investments in R&D activities, establishment of new manufacturing facilities, and supply chain optimization, could create opportunities for the market growth.

List of Key Companies in Methanol Market

• Methanex Corporation
• HELM AG
• SABIC
• MITSUBISHI GAS CHEMICAL COMPANY, INC
• MITSUI & CO., LTD.
• Celanese Corporation
• BASF 
• PETRONAS Chemicals Group Berhad
• LyondellBasell Industries Holdings B.V. 
• ZPCIR

Key Industry Developments

• January 2024 (Joint Venture): Fairway Methanol, a joint venture between Celanese and Mitsui & Co., commenced the operation of a carbon capture and utilization system at Celanese's facility in Clear Lake, Texas. This system converts 180,000 metric tons of carbon dioxide annually into 130,000 metric tons of methanol.
• January 2024 (Partnership): BASF announced a strategic partnership with Envision Energy, a prominent green technology leader specializing in comprehensive net-zero solutions. This collaboration focuses on advancing the conversion of green hydrogen and CO2 into e-methanol by utilizing an innovative and dynamic process design.

The global methanol market has been segmented as:

By Feedstock

• Natural Gas
• Coal
• Biomass & Renewables

By Derivative

• Formaldehyde
• Acetic Acid
• Methyl Tertiary Butyl Ether (MTBE)
• Dimethyl Ether (DME)
• Biodiesel
• MTO/MTP
• Solvent
• Others

By Application

• Construction
• Automotive
• Pharmaceuticals
• Electronics
• Chemical
• Others

By Region

• North America
• U.S.
• Canada
• Mexico
• Europe
• France
• UK
• Spain
• Germany
• Italy
• Russia
• Rest of Europe
• Asia Pacific
• China
• Japan
• India
• South Korea
• Rest of Asia Pacific
• Middle East & Africa
• GCC
• North Africa
• South Africa
• Rest of Middle East & Africa
• Latin America
• Brazil
• Argentina
• Rest of Latin America