Methanex believes that output will increase in Links of London Sale and 2012 as hydrocarbons production steps up and feedstock becomes more available, but BMI doubts its ability to put all four methanol plants back into operation over the medium term. We estimate methanol production of around 3.8mn tonnes in 2010, with the Cabo Negro complex operating at little over 30% capacity. Output is unlikely to exceed 1.5mn tonnes, or around 40% total capacity, in 2011 based on two plants operating at an average of 78% capacity. Energy shortages also plague polymer production. A lack of propylene feedstock has meant that Petroquim has failed to produce near the 150,000tpa capacity at its PP plant. As such, Links of London Charms forecasts that capacities will not be increased over the forecast period, with ethylene capacity at 60,000tpa, propylene at 100,000tpa, PE at 46,000tpa and PP at 150,000tpa. Petroquim's PP facilities were closed following the earthquake that hit Chile in February 2010, although they were not directly damaged. The PP unit came back online in July although initially producing at a rate of just 7-10% capacity. BMI believes that the plant was back to operational capacity by the end of 2010. Much more will need to be done to reduce risk and secure long-term feedstock supplies if the Chilean petrochemical sector is to grow. Yet Chile does offer some advantages. Methanex has shown that Chilean methanol production costs can be at least half those in China, provided feedstock is available. Links of London Blue Friendship Bracelet Chile, as for most other exporters, the demand from China should enable the Methanex plants to run at maximum capacity.Although vehicle sales growth in China is clearly slowing, at 17% in September, compared with 18% in August and 21% in June, the deceleration in demand has not been as rapid as expected in H210, and BMI has revised sales forecasts for both passenger and commercial vehicles upwards for 2010. This mirrors our Asia team's view that any economic slowdown in China is now likely to take hold in 2011 rather than Q410. Total vehicle sales for the first nine months of 2010 were up 36% to 13.1mn units, led by 37% growth in passenger car sales, to 9.9mn units. Although this was a slight drop from the 40% growth in the first eight months of the year, the extension of incentives on car purchases to the end of the year has been enough to sustain healthy demand. By the end of 2010, we expect passenger car sales to be Links of London Bookworm Charm by at least 28% to 13.2mn. Commercial vehicle sales of 3.2mn units for the nine months to September are already nearing the 3.31mn units recorded in the whole of 2009.
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