The Methanol-to-Hydrocarbons process was discovered at Mobil Oil in . This process is used to convert methanol to products such as olefins and gasoline. The methanol can first be obtained from coal or natural gas. More generally, a Methanol-to-Olefins MTO) unit is the heart of a modern Coal-to-Olefins (CTO) plant (Fig. 1). Typically, coal is first gasified with steam to produce synthetic gas (CO and H2) in a CTO plant, and then transformed into methanol via a methanol synthesis unit. Through a MTO unit, methanol can be further converted into ethylene and propylene. After passing through a separation unit, the highly purified ethylene and propylene can be used to produce polymers and/or other downstream derivatives.
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Figure 1 - Coal-to-Olefins (CTO) plant: (a) provides an overview of the Shenhua Baotou CTO plant, and (b) schematically shows the main units in a CTO plant.
(a) (b)
Critical to the successful application of the MTO process are acidic zeolite catalysts. Without these catalysts, the chemical reactions involved in the MTO process would be too slow for the process to be economically feasible. The conversion of methanol to olefins on acidic zeolites takes place through a complex network of chemical reactions.
The distribution of products and thus the “selectivity” depends on the temperature, among other factors. Selectivity is a measure of the amount of one product produced relative to others when the possibility to form multiple products exists. Selectivity depends on temperature through the Arrhenius law for the different rate constants. In general, at lower temperatures methanol reacts to form Dimethyl Ether (DME). At higher temperatures, the desired products (olefins) are produced and the selectivity for DME decreases.
A simplified Block Diagram for a stand-alone MTO Process is shown in Fig. 2. The Fluidised-Bed Reactor/Regenerator system converts feed methanol into a mixture of olefins, which is then fractionated to yield polymer-grade light olefins as major products.
Figure 2 - Simplified Layout of a Stand-Alone MTO Process
Contract Plant numbers and total Olefin capacity of each Licensor are listed in Table 1. China has the most MTO commercial plants (totalling 24 plants) on operation as of March .
Table 1 - Contract Plan Numbers and Total Olefin Capacity / On-Operating Commercial MTO Plant Numbers in China up to March
Licensor SYNReferences
China’s methanol-to-olefins (MTO) development represents a significant strategic move within the petrochemical industry. It is being driven by the country’s growing demand for olefins such as ethylene and propylene, which are key building blocks for a wide range of products, including plastics, fibers, and chemicals. MTO processes convert methanol, which can be derived from various sources—including coal, natural gas, or biomass—into olefins.
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Chemical Market Analytics by OPIS defines MTO as sourcing all or most feedstock methanol from the merchant market. MTO plants in China exhibit varying economic dynamics depending on their locations and product derivatives. MTO plays a pivotal role in both the merchant methanol and olefin markets within China. MTO plants, especially those not integrated with methanol production, constitute a significant source of demand for methanol.
MTO olefin derivatives encompass a wide array of products. While polyolefins represent the largest segment of olefin derivatives in China, accounting for over 60% of olefins consumption, the distribution of such products across the nine MTO facilities is varied. Among these, only three MTO plants have the capacity for polyethylene production while five possess capabilities for polypropylene manufacturing, with Nanjing Chengzhi and Shandong Luxi exclusively marketing all their ethylene monomers while Shandong Henghong commercializes all of its propylene monomers. This strategic approach to marketing underscores the unique operational dynamics within each MTO facility and reflects their individual market strategies.
Certain East China MTO plants have the flexibility to trade olefin monomers based on market conditions. Unfavorable economics for MTO facilities could worsen their impact on the ethylene market. Integrated players actively participate in the spot ethylene market. If downstream units remain unprofitable, MTO owners may scale back or cease operations, choosing to buy spot olefins instead—particularly when methanol-to-olefin price gaps narrow.
Since the middle of , high energy prices have weighed on MTO production economics. On one hand, rising methanol prices have increased MTO production cost. On the other hand, it is hard for MTO players to raise product prices due to the increasing olefin and derivatives supply, particularly from steam crackers.
The production economics for MTO plants remained weak, and most MTO plants are estimated to have had negative light olefin margins in June this year.
The weighted-average derivatives margin based on spot ethylene and propylene prices is currently much higher than the light olefin margins, and MTO plants may choose to reduce olefin production and purchase light olefins to produce derivatives.
Driven by soft margins, production at MTO units continued to run at reduced rates, with several units continuing to implement production cuts at various levels. It is anticipated that other MTO producers will maintain production cuts due to unsatisfactory margins in June earlier this year.
Additionally, three MTO plants are integrating with steam crackers or crude-to-chemicals (COTC) processes. The prospect of higher derivative margins might prompt companies to optimize MTO light olefin production. In the coming years, Chinese steam crackers will pose direct competition to MTO facilities in terms of olefin production.
China has been aggressively expanding olefins capacity by building plenty of new steam crackers. We expect that if steam crackers can produce olefins more cost-effectively than MTO plants, it could lead to pricing pressure and reduced market share for MTO-derived olefins. In the past several years, two MTO plants were idled. Hence, we anticipate that MTO operating rates will remain low in the near-future.
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