Chemical Profile 1,4-Butanediol

23 June 2003 00:00  [Source: ICB Americas]

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1,4-BUTANEDIOL   June 23, 2003

PRODUCER

CAPACITY*

BASF, Geismar, La.

300

BP Chemicals, Lima, Ohio

140

DuPont, LaPorte, Tex.

240

Lyondel Chemical, Channelview, Tex.

120

Total

800



*Millions of pounds per year of 1,4-butanediol (BDO). There are a number of process technologies available for the production of BDO. The traditional method is the Reppe process in which acetylene is reacted with formaldehyde. Lyondell Chemical employs a three-step conversion of propylene oxide, developed in conjunction with Kuraray Co. Ltd. of Japan. The newest processes use maleic anhydride or n-butane as starting points. BP Chemicals with Lurgi AG have developed an integrated butane-to-butanediol process, which is being employed at Lima, Ohio. Called the Geminox process, it combines BP's process for the catalytic oxidation of butane in air using a fluidized bed with Lurgi's fixed bed fatty acid hydrogenation technology. International Specialty Products (ISP) discontinued production of butanediol at the company's Texas City, Tex., plant in March 2001. Installed capacity was rated at 65 million pounds per year. ISP had previously closed its 55 million pound plant at Calvert City, Ky. Sisas (Milan) postponed indefinitely a previously announced 220 million pound plant, at an unidentified US location, which originally was to have come on stream in 2001. In 1999, BASF added 20 million pounds to its unit in Geismar, La. The company also an-nounced a 200 million pound BDO plant for Geis-mar that would be based on butane and maleic anhydride feed. Construction was slated to begin in early 2001, but this did not materialize. Profile last published 6/26/00; this revision 6/23/03.

DEMAND
2001: 781 million pounds; 2002: 821 million pounds; 2006: 995 million pounds, projected. Demand equals production, plus imports, less exports. Trade data on BDO are not reported by the US Department of Commerce. It is estimated, however, that roughly 40 million pounds are imported and 30 million pounds are exported, each year.

GROWTH
Historical (1997-2002): 4.1 percent per year; Future: 5.0 percent per yearthrough 2006.

PRICE
Historical (1997-2002): High, 75 cents per pound, spot, tanks, f.o.b., frt. equald.; low, 50 cents per pound, same basis; Current: 65 cents per pound, same basis.

USES
Tetrahydrofuran (THF), 48 percent; polybutylene terephthalate (PBT) resins, 23 percent; gamma-butyrolactone (GBL), 21 percent; polyurethanes, 5 percent; miscellaneous, including uses as a solvent, a coating resin raw material, and an intermediate in chemical and pharmaceutical production, 3 percent.

STRENGTH
About 65 percent of the BDO manufactured is consumed captively as all US manufacturers are forward integrated into the significant BDO derivatives. Half of the remaining production is under long-term contracts, and the remainder is supplied to the merchant market. Weaker prices in the marketplace have opened opportunities for users to switch from traditionally lower-priced plastics to BDO-based polymers, such as polybutylene terephthalate (PBT). PBT is currently growing at better than 6 percent annually, principally consumed in engineering plastics for the automotive and electronics industries. BDO's largest use segment, tetrahydrofuran (THF), is also doing well with nearly 5 percent annual growth. About 80 percent of THF goes into urethane elastomers, polyurethane fibers (Spandex) and high-performance co-polyester-ether elastomers.

WEAKNESS
The buildup of new capacity during the mid-1990s resulted in an oversupply of butanediol. Strong downstream derivative demand and more cost-effective production routes attracted producers, but the buildup led to BDO prices falling by 50 percent in the marketplace. Continued demand growth and small plant rationalizations have subsequently improved the supply-demand situation. However, overseas capacity expansions recently completed and currently underway, are adding almost 30 percent to the existing global capacity.

OUTLOOK
In the past decade, BDO demand enjoyed an average growth rate of nearly 7 percent per year. In recent years, however, growth has slowed as some large end uses such as PBT resins are becoming mature products. Although maturing, most end-use applications such as spandex fibers and engineering plastics are still growing at better than GDP rates throughout the world. As the industry is shifting away from the acetylene-based Reppe process to cheaper routes using propylene, butadiene, or butane as the principal feed material, improved process economics will translate into improved operating margins for manufacturers. With domestic supply-demand in balance, and with no BDO capacity additions underway in the US, imported product will become more important over the forecasted period. BDO demand is projected to grow at 5 percent per year through 2006.





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