BDO Industries seeks a way out

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BDO Industry Strives for a Way Out Author/Source: Sinochem New Network Date: June 24, 2020 Clicks: 5 Strict control over capacity expansion, promotion of the maleic anhydride process, and exploration of downstream demand Since the end of February this year, the domestic market for 1,4-butanediol (BDO) has been on a downward trend. Taking the East China region as an example, the current mainstream price in the BDO market is around 7,500 yuan per ton, a decrease of 2,100 yuan per ton compared to the beginning of the year, representing a decline of 21.9%. 　　Industry experts analyze that high production costs, a significant increase in capacity, and stagnant demand from downstream sectors are the main reasons why the BDO market has failed to recover. For the BDO industry to emerge from its downturn, it is necessary to strictly control excessive capacity expansion, develop environmentally friendly production processes, and explore downstream demand. 　　Strict control over capacity expansion: In recent years, as China has managed to absorb foreign BDO technology, master the production processes, and improve them, this has led to an increase in the scale of individual BDO production facilities in the country. As a result, the BDO industry has expanded rapidly, competition has intensified, and there is now a severe surplus of BDO production capacity in China. According to statistics from Chemical Online, as of the end of 2019, China’s total BDO production capacity was around 3.03 million tons. Of this, the capacity produced using the calcium carbide method amounted to 2.29 million tons per year, accounting for about 75% of the country’s total capacity, while the capacity generated through the more environmentally friendly maleic anhydride method accounted for only around 8%. It is reported that the BDO production capacity of projects under construction or planned in the future will exceed one million tons, and the scale of these facilities is trending toward larger sizes. However, the growth rate of demand in the downstream market lags behind the growth rate of production capacity. Given the large number of plants still planned to be built in the future, it is expected that there will continue to be a surplus of BDO in the domestic market for a considerable period of time. 　　Online chemical industry analysts believe that the process of integration and capacity reduction in the BDO sector still has a long way to go. It is urgent for the major domestic BDO manufacturers to carry out reforms and transformations. Controlling excessive capacity expansion, stabilizing domestic demand, and increasing investment in advanced technologies will be the main priorities for BDO companies in the future. 　　Promoting the maleic anhydride process In terms of production processes, the mainstream methods in China are the calcium carbide method (alkynal method) and the maleic anhydride method. China is rich in and easily accessible to calcium carbide resources, which is why the alkyne-aldehyde method dominates. However, as China imposes increasingly strict environmental requirements on chemical manufacturing facilities, producers using the calcium carbide method may invest more funds in environmental protection efforts. In the future, they will develop and adopt efficient and cost-effective wastewater treatment technologies and systems to reduce pollutant emissions. 　　The anhydride method offers advantages such as low investment costs, reduced waste emissions, the ability to produce furan (THF) and γ-butyrolactone (GBL) as by-products, and the flexibility to adjust the ratio of products produced; it is therefore the direction in which BDO production processes will develop in the future. 　　Expanding downstream demand 　From the demand side, domestic BDO has three main downstream applications: polybutylene terephthalate (PBT), THF, and GBL. Among them, THF is a by-product of PBT, and its main downstream product is poly**furane (PTMEG). The largest market for PTMEG is spandex, accounting for about 49%; followed by polyurethane elastomers, accounting for about 35%; and then ester-ether copolymer elastomers, accounting for about 15%. 　　It is understood that China’s spandex production capacity accounts for 70% to 75% of the global total. In recent years, the domestic spandex production capacity has been continuously expanding, with the industry’s operating rate generally remaining high. The increase in spandex production has also led to a rise in demand for PTMEG, resulting in a positive trend for PTMEG prices. The application of PTMEG in the field of ester-ether copolymer elastomers in China is essentially non-existent, leaving room for further development. 　　At the same time, as the use of plastics in the automotive industry continues to increase, their application in energy-saving lamps within the electrical industry becomes more widespread, and various modification techniques for PBT are developed and put into use, these sectors will be the main drivers of BDO consumption in the coming years. 　　Another downstream product of BDO, polybutylene terephthalate (PBAT), is also worth paying attention to. As an environmentally friendly material with excellent performance, this product can reduce the consumption of petroleum resources, which is of great significance for environmental improvement. In the future, projects such as Huafeng’s 300,000 tons per year production facility for biodegradable new materials, and Xinjiang Wangjinglong’s 1.3 million tons per year PBAT production facility are all in the planning stage; these could all become new sources of growth for BDO consumption. 　　In summary, over the next few years BDO will accelerate the pace of industrial structure adjustment, phase out outdated production capacity, and gain a greater competitive edge in the market. At the same time, domestic enterprises need to be innovative and proactive, introducing products and technologies suitable for the Chinese market, as well as developing more innovative products and solutions to meet market demands and achieve rapid growth in performance.