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To understand the history of BDO, this article is all you need! Author/Source: BDO Research Institute Date: 2022-10-31 Clicks: 16 In recent years, consumption of BDO in China’s industry has been on the rise. With the implementation of policies aimed at restricting plastic use, the demand for biodegradable plastic PBAT is set to drive a significant increase in demand for BDO, sparking another wave of investment in the BDO industry chain. Amid this investment boom, let’s take a look back at BDO’s tumultuous development history. In the early stages of development—reliance on imports. BDO is a chemical product derived from acetylene that was produced starting in the 1930s, but 1,4-butanediol did not see rapid development at that time. China began research on the production technology of 1,4-butanediol in the 1960s; most of the production processes employed the Reppe method developed domestically, using calcium carbide and acetylene as raw materials, primarily for the production of butynediol. The production of BDO in our country began in the 1990s; in 1995, the Wusong Chemical Plant in Shanghai built a plant with an annual capacity of 2,000 tons, which was the largest Reppe-process production facility in the country. Due to high production costs and poor profitability, the factory switched to producing acetylenediol. On January 21, 2002, a telephone survey was conducted at the Wusong Chemical Plant in Shanghai, and it was found that the BDO production unit had stopped operating. The same is true for other BDO plants in the country that are smaller in scale than it. In 1998, China’s BDO production capacity was around 4,700 tons per year, while the actual output was only 400–500 tons per year. The scale of production was small and costs were high, making it impossible to compete with imported products; as a result, almost all of the BDO needed in the Chinese market had to be imported. In 1996, Dongying in Shandong Province signed a contract for a 10,000-ton-per-year plant using the BDO production technology based on the DAVYMCKEE anhydride esterification and hydrogenation method from the UK. Construction began at the end of 1998, and the plant came online in December 1999. This was China’s first 10,000-ton-scale BDO production facility, marking the start of industrial production of BDO in the country. The plant achieved near-full capacity operation in 2001, but due to high consumption and costs, the company became insolvent and was forced to declare bankruptcy at the end of 2002. The company was later renamed Shandong Dongying Zhongya Chemical Co., Ltd., and the plant resumed production in 2004. Period of rapid development – The construction and commissioning of a 10,000-ton-per-year BDO plant using the acetylene-aldehyde process. Entering the 21st century, China’s BDO industry entered a period of rapid development, and its dependence on imports gradually decreased. This was made possible by Tong Lixiang, the former chairman of Shanxi Sanwei, who spearheaded the introduction of the alkyne-aldehyde method for BDO production. In 1995, Shanxi Sanwei, then still known as Shanxi Vinylon Factory, completed the expansion and renovation project for 1,4-butyne diol, enabling this product, which boasts world-leading technology, to reach an annual production capacity of 1,000 tons. In the same year, Shanxi Sanwei learned at the \"Linde Company New Technology Seminar\" held in Beijing that the company was interested in transferring its butanediol production technology using the alkyne-aldehyde method to China. Thus, he seized the opportunity to introduce the technology to China, resulting in the construction of China’s first 10,000-ton-scale large-scale BDO plant using the acetylene-aldehyde process—the largest BDO plant on the Chinese mainland at that time. In March 2002, Shanxi Sanwei Group Co., Ltd. introduced a 25,000-ton/year BDO production facility from the American company ISP (formerly GAF); this facility utilized GAF’s improved low-pressure slurry-bed Reppe process technology, and it was put into operation. Once this project is completed and put into operation, it will not only put an end to China’s long-standing reliance on imports of BDO due to technical restrictions, but it will also have a positive and profound impact on the development of the BDO industry chain as well as on the economic growth of the country. Turning point – BDO import anti-dumping: In 2009, the **Ministry of Commerce introduced anti-dumping policies regarding BDO imports, which led to an expansion in the scale of BDO production facilities in the country. On December 24, 2009, the Ministry of Commerce issued Announcement No. 106 of 2009, announcing the final decision regarding the anti-dumping investigation into imported 1,4-butanediol (BDO) originating from Saudi Arabia and Taiwan. The decision concluded that such imported products were subject to dumping, that they caused substantial damage to China’s 1,4-butanediol industry, and that there was a causal relationship between the dumping and the substantial damage. It is decided that, starting from December 25, 2009, anti-dumping duties shall be imposed on imports of this product originating from the aforementioned ** and regions, at rates ranging from 4.5% to 13.6%. Healthy development of the industry – Establishment of BDO industry associations. During the period from 2005 to 2012, the development of China’s BDO industry can be summarized in three points: a concentration of new projects ； Competitiveness is evident ； Economies of scale are evident. In 2012, the total production capacity of China’s 1,4-butanediol production facilities was 606,000 tons per year. During the period from 2005 to 2012, the average annual growth rate of China’s total BDO production capacity was 25.44%. The main factors driving the rapid development of China’s BDO industry are the rapid growth of the automotive and electronics industries, which have effectively promoted the development of the polyurethane industry ； China’s apparel industry was the first to emerge from the downturn caused by the financial crisis, thereby driving demand for spandex ； The traditional consumer sector has also maintained good growth. After 2012, BDO production capacity surged, leading to a gradual saturation of the market. Following a peak price of 25,000 yuan per ton, BDO prices began to decline. Between 2015 and 2016, they hit rock bottom, at one point falling below 8,000 yuan per ton. As a result, the entire industry fell into a state of losses. Subsequently, the leading companies in the BDO industry, with Meike Chemicals at its head, aimed to ensure the healthy development of this industry. In 2016, they established the National Association of 1,4-Butanediol Producers together with Shaanxi Shanhua, Lanshan Tunhe, Inner Mongolia Dongyuan, and other companies. Subsequently, based on that association, the 1,4-butanediol working group of the Chemical New Materials Committee of the China Petroleum and Chemical Industry Federation was established; Lu Zhengping served as the first chairman, while Deng Huichang acted as the secretary-general. Guided by policies, leading enterprises play a pioneering role in driving reform across the entire BDO industry; they recommend that decision-making authorities impose anti-dumping measures on foreign BDO firms to ensure the healthy and sustainable development of the industry as a whole. It was this severe test posed by the pandemic that allowed our BDO enterprise to maintain its strength, and it played a crucial role at this critical moment of the spread of the COVID-19 virus. Since the 1990s, along with the rapid development of China’s national economy, the BDO industry in China has grown from nothing to something significant, expanding from a small scale to a larger one. The BDO industry has experienced rapid development, shifting from relying largely on imports in the 1990s to achieving industrialization at the beginning of the 21st century. Today, China has become the world’s largest producer and consumer of BDO, with production capacity continuing to expand. The growth of the BDO industry serves as a typical example of China’s industrial development, particularly that of the fine chemicals sector.