Brad Boyd presentation of methanol development

METHANEX CORPORATION 2012 METHANEX CORPORATION 2012

Methanol Industry Presentation

Brad Boyd VP Finance & Business Integration EMethanex

METHANEX CORPORATION 2012

Agenda

Methanex Overview

Methanol Demand

o Fuel Blending

o DME

o MTO

o New opportunities for methanol-to-energy: methanol & DME for ships

Methanol Capacity & Supply

Methanol Price Outlook/ Cost Curve

Methanol Market Risks

2

METHANEX CORPORATION 2012 3

Methanex • Production Capacity (millions of tonnes)

• Chile: 0.5-2.8 • Trinidad: 2.0 • New Zealand: 1.5-2.4 • Egypt (60%): 0.8 • Canada: 0.5 • Louisiana:1.0 (2014)

• ~15% of global market share

• Enterprise Value: ~US$ 3 Billion

• Waterfront Shipping Subsidiary: ~17 vessels

• Employees: ~1,000

• Shares listed: NASDAQ, Toronto, Santiago


Industry overview

2011 ~50 MMT annual global demand

Top producers account for ~ half of global sales

Methanex is the global leader

o ~15% global market share

o Global company with a presence in all major regions

o Methanex posted methanol prices are a key pricing marker in all major markets

Source: Methanex

2011 Estimated Global Market Share

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Methanex SCC/Helm

(MHTL)

Sabic MGC Mitsubishi

(MSK)

IPCC Petronas Mitsui


Healthy demand growth driven by energy

Healthy traditional chemical demand growth in-line with global GDP forecasts

Continued strong demand growth into energy applications

9% CAGR 6% CAGR

Source: CMAI, August 2012 (excludes integrated MTO demand)

5


Demand by Derivative 2007 vs. 2016

6



China’s robust demand growth

China represents ~ 80% of global demand growth 2016 versus 2011

Asia ~ 70% of global demand by 2016

More moderate Atlantic growth projected

7



Formaldehyde Acetic Acid Pharmaceuticals, Wood Industry, Automotive Fleece, Adhesives, Paints

Dimethyl Terephthalate Methyl Methacrylate Methyl Chloride Recyclable plastic bottles LED & LCD Devices Silicones

Traditional Uses (Mature Markets)

Methanol traditional applications


Henry Hub Gas versus Brent Crude Oil1990 - 2016

$0

$20

$40

$60

$80

$100

$120

1990 1995 2000 2005 2010 2015

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

$18.00

$20.00

Methanol-to-energy upgrades

coal & gas to oil product values

Source: CMAI, August 2012

High crude oil prices, relative to natural gas and coal, provide an opportunity to

upgrade natural gas and coal into liquid products

Methanol is being used as an energy carrier to capture this value opportunity

Brent crude oil

Henry Hub gas

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MTG

DME Olefins

Fuel blending

Methanol energy applications

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Fuel blending

Global gasoline blending regulations

China

o National Methanol Fuel for Automobiles

and M-85 standards approved

o National M-15 standard under review

o Provincial standards drive growth

Europe

o 3% methanol allowed in standard gasoline

USA

o Open Fuels Standard Act

Other Countries

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DME

Market applications

12


2011 Global Olefins Demand216 MMT

Butylene Isoprene

Propylene 78 MMT,

5.8% growthEthylene 124 MMT,

4.7% growth

MTO

Robust olefins demand growth

Source: MMSA

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MTO

CTO / MTO cost competitive versus naphtha

CTO makes economic and strategic sense for China

China CTO / MTO drivers

o Strong olefins demand growth

o Energy self-sufficiency

o China coal monetization to higher-value

ETHYLENE COST CURVE 2010

Ningbo Skyford merchant MTO plant (1.8 MMT MeOH)

under construction: processing facility

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MTO

China CTO/MTO rapid development

Rapid growth of both integrated and merchant methanol

Integrated facilities will have limited net methanol demand

China CTO & MTO Methanol Capacity

0

2

4

6

8

10

12

14

Operational Under construction Approved for

construction

MM

T

Integrated CTOMerchant MTO

15


Northern Europe introducing tighter ship emissions regulations starting Jan 2015 –

Cleaner-burning marine fuels including methanol & DME being considered

40 MMTPA methanol equivalent market

Methanex involved in pilot project with shipping industry partners

Support and funding from Sweden, Denmark, Norway, Finland governments

North Europe Sulphur Emissions Control Area

Stena ‘Scanrail’ running on methanol/DME

New opportunities emerging for

methanol into energy

‘SPIRETH’ project – Methanol and DME for ships


Demand growth outpacing capacity additions

Marginal Chinese production required to operate at sustained high rates

Methanex has several initiatives to increase production in a favorable supply/demand environment

Demand

Growth

+ ~25 MMT

17

Global Methanol Supply/Demand Outlook: 2012-2016

North America

Chile Assets

New Zealand

Other Industry Participants

China (merchant capacity)

0

5

10

15

20

25

Demand Growth Potential Capacity Additions

Millio

ns o

f T

on

nes

Methanex

Projects

- Demand growth forecast and China capacity additions exclude integrated demand for methanol into olefins (Source: CMAI)

- Other capacity additions include plants that have started up in mid-2012 (Source: Methanex)


0

300

0 8,000 16,000 24,000 32,000 40,000

Estim

ate

d D

eliv

ere

d c

ash

co

st

(US

$/t

on

ne

) Industry environment

China, Russia

Exports,

Germany, India,

E. Europe

Eq. Guinea,

Indonesia, Iran,

Malaysia,

Methanex Plants,

Oman, Qatar,

Saudi, Trinidad

(MHTL),

Venezuela, USA

Energy Price of Methanol: $380 - 390/tonne methanol energy price equivalent when oil = $100/barrel

Current Estimated Global Demand ~ 51 million tonnes per annum

Estimated Cumulative Annual Production (000’s tonnes/year)

48,000

• High crude oil and coal prices in China have supported a steep industry cost curve

Source: Methanex

Notes: Assumes $100 crude oil (Brent) and ~$110 US/MT China coal (~700 RMB/MT, FOB Qinhuangdao Port, China). Excludes methanol related gas sharing costs.

200

100

400


Market risks

Lower global economic growth

Oil prices

China’s ability to run at higher operating rates

Ex-China industry operating rate improves

MTO industry evolution

Industry legislation, regulations & standards

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THANK YOU!

Brad Boyd presentation of methanol development

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