Vital chemical falls victim to Western sanctions, Kommersant daily reports
Methanol production in Russia has fallen to the minimum levels needed to keep production plants running, the business daily Kommersant reported on Monday.
The suspension of trade with customers in Europe and a drop in domestic demand are forcing producers to drastically reduce production and sell their products to China at a knockdown price, the newspaper writes, citing its sources.
In 2020, Russia was the world’s fourth largest supplier of methanol, accounting for 10% of global exports, according to economic data portal TrendEconomy. Major importers of methanol include China, the United States and India.
Methanol, the simplest alcohol, can be obtained from natural gas and has a variety of industrial uses. It is a chemical building block for plastics, paints and building materials and also widely used in the automotive industry and as a fuel.
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According to Kommersant, there are nine methanol producers in Russia with a combined output of 4.5 million tonnes per year, almost half of which is for export. Last year, the sector grew rapidly amid high global prices, and Russian companies had plans to expand. Russia’s main customer was the EU, and although methanol itself was not targeted by sanctions, its transport by sea through EU ports became problematic due to restrictions on shipping imposed by the block. Methanol demand in China has also slowed due to the country’s zero Covid policy and subsequent lockdowns.
Methanol producers want to avoid closing plants completely because restarting them would be costly, however, some plants have already been partially closed, writes Kommersant.
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