BDO’s production capacity is being gradually brought online, and a major test lies ahead with the start of succinic anhydride production!

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BDO’s production capacity is being gradually brought online, and a major test lies ahead with the start of succinic anhydride production! Author/Source: BDO Research Institute Date: 2022-12-02 Clicks: 24 In 2023, the domestic maleic anhydride market will see the gradual commissioning of new production capacities for products such as BDO produced via the maleic anhydride method. However, it will also have to face the challenges posed by another wave of capacity expansion on the supply side, resulting in ongoing supply pressures. New production capacity in the millions of tons range is set to enter the market, putting significant pressure on the supply side. In 2022, due to the decline in industries such as real estate, domestic demand dropped more than expected; as a result, the supply of maleic anhydride became relatively excessive, exerting considerable pressure on market trends. However, driven by the growth prospects in emerging downstream sectors such as biodegradable plastics and new energy vehicles, the planned production capacity of maleic anhydride in China is set to exceed 8 million tons over the next five years, leading to another wave of unprecedented capacity expansion in this industry. As the starting year of a new wave of capacity expansion, in 2023 alone China is set to see the commissioning of approximately 1.66 million tons of new production capacity using the n-butane process – a truly record-breaking year in terms of new capacity additions. This undoubtedly adds further pressure to an already oversupplied maleic anhydride market. http://img.yf116.cn/image/img/20221202/1530245582431.jpg Judging from the production progress, the supply situation will be more severe in the second half of the year. A production capacity of around 300,000 tons is scheduled to come online in the first half of 2023, while another 1.36 million tons is planned to be put into operation in the second half of the year ； In terms of geographical distribution, there is relatively high supply pressure in East China and its surrounding areas, while no new production capacity is expected to be added in South China for the time being. The production capacity of 1.65 million tons is mainly distributed in five provinces, including Shandong, Liaoning, and Henan. Among them, Liaoning accounts for 50.90% of the total capacity, while Shandong accounts for 27.27%. In the first year of production for new products such as BDO, the downstream applications are becoming increasingly diverse. In addition to traditional downstream products like unsaturated resins, in 2023 the downstream sector related to maleic anhydride will also see the gradual introduction of new products manufactured using maleic anhydride, such as BDO. In particular, the entry of integrated projects will significantly increase the amount of maleic anhydride used internally, and this will mark the beginning of a new pattern in the maleic anhydride industry. http://img.yf116.cn/image/img/20221202/1530595585912.jpg However, although there are also many plans to put downstream products of maleic anhydride into operation in 2023, these are still insufficient compared to the expansion in production on the supply side. The increase in domestic consumption of maleic anhydride may only lead to supply shortages in regions such as South China, and it cannot effectively alleviate the overall oversupply problem facing the maleic anhydride industry at present. Excess supply is putting pressure on price trends, and the overall price level is likely to continue falling throughout the year. Looking ahead to 2023, as policy measures to stabilize the market have been intensified recently, the real estate sector may reach a bottom and start to recover. Demand for downstream products of maleic anhydride, such as unsaturated resins and coatings, is expected to pick up after reaching a low point. Additionally, with the gradual introduction of production capacity for products like BDO, domestic consumption of maleic anhydride in 2023 is set to increase significantly compared to 2022. However, the increase in demand may not be able to fully offset the rise in the supply of maleic anhydride; it is expected that the pressure of over-supply of maleic anhydride will persist in 2023, with price trends being determined by the specific changes in the supply side.