We estimate that methanol demand, excluding methanol demand from integrated methanol to olefins facilities, is currently approximately 53 million tonnes on an annualized basis.
The outlook for methanol demand growth continues to be strong. Traditional chemical derivatives consume about two-thirds of global methanol demand and growth is correlated to industrial production.
Energy-related applications consume the remaining one third of global methanol demand, and the wide disparity between the price of crude oil and that of natural gas and coal has resulted in an increased use of methanol in energy-related applications, such as direct methanol blending into gasoline and DME and biodiesel production. Growth of direct methanol blending into gasoline in China has been particularly strong and we believe that future growth in this application is supported by numerous provincial and national fuel-blending standards, such as M15 or M85 (15% methanol and 85% methanol, respectively).
China is also leading the commercialization of methanol's use as a feedstock to manufacture olefins. The use of methanol to produce olefins, at current energy prices, is proving to be cost competitive relative to the traditional production of olefins from naphtha. There are now five methanol-to-olefins (MTO) plants operating in China with the capacity to consume approximately seven million tonnes of methanol annually. While three of these plants are integrated and purchase methanol only to supplement their production, two of these plants are dependent on merchant methanol supply. We believe demand potential into energy-related applications and olefins production will continue to grow.
During the first quarter of 2013, steady demand and planned and unplanned industry outages contributed to upward pressure on pricing in Europe and North America, while pricing in Asia was relatively stable. Our average non-discounted price in the first quarter was $474 per tonne. Entering the second quarter, market conditions remain healthy and prices are stable. Our European non-discounted price for the second quarter of 2013 increased to EUR390 per tonne ($505 per tonne).
Over the next few years, there is a modest level of new capacity expected to come on-stream relative to demand growth expectations. There is a 0.8 million tonne plant expected to restart in Channelview, Texas in 2013 and a 0.7 million tonne plant expected to start up in Azerbaijan in 2013. We are in the process of refurbishing the Waitara Valley facility and debottlenecking our Motunui facilities in New Zealand and these initiatives are expected to add up to 0.9 million tonnes of additional operating capacity by the end of 2013. We are relocating two idle Chile facilities to Geismar, Louisiana with the first 1.0 million tonne facility expected to start up by the end of 2014 and the second 1.0 million tonne facility expected to start up in early 2016. We expect that production from new capacity in China will be consumed in that country and that higher cost production capacity in China will need to operate in order to satisfy demand growth.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operating activities
Cash flows from operating activities in the first quarter of 2013 were $118 million compared with $76 million for the fourth quarter of 2012 and $74 million for the first quarter of 2012. The changes in cash flows from operating activities resulted from changes in the following:
Q1 2013 Q1 2013 compared with compared with($ millions) Q4 2012 Q1 2012--------------------------------------------------------------------------------------------------------------------------------------------------------Change in Adjusted EBITDA (attributable to Methanex shareholders) $ 30 $ 56Exclude change in Adjusted EBITDA of associate (Atlas) 1 (12)Change in cash flows attributable to non- controlling interests 2 (8)Changes in non-cash working capital 13 26Income taxes paid 7 (2)Other (11) (16)----------------------------------------------------------------------------Increase in cash flows from operating activities $ 42 $ 44----------------------------------------------------------------------------
