26 January 2009 00:00 [Source: ICB]
The largest consumer of 1,4-Butanediol (BDO) is tetrahydrofuran (THF), used to make polytetramethylene ether glycol (PTMEG) which goes mainly into spandex fibers, urethane elastomers and copolyester ethers. The next largest outlet is polybutylene terephthalate (PBT).
Sizeable quantities of BDO go into the manufacture of gamma-butyrolactone (GBL), which has outlets in electronics, pharmaceuticals, agrochemicals and high-performance polymers.
Demand in the first half of 2008 was good with PBT and polyurethane (PU) performing well, but the spandex fiber market was weak. Demand slowed in the second half and plummeted in November, as the credit crisis and destocking took effect.
Output has been reduced and customers, struggling to forecast sales volumes for the first quarter (Q1), are buying on a hand-to-mouth basis. New capacity came on stream in China and South Korea last year, adding to the global surplus. Xinjiang Markor Chemical started up a 60,000 tonne/year plant in May and SK Energy's 40,000 tonne/year plant started production in March.
Meanwhile, China's Shanxi Sanwei has delayed start-up of its 75,000 tonne/year line to April: it was originally due to go online by December last year. Overall capacity in 2008 was about 1.65m tonnes, with demand about 1.2-1.3m tonnes.
Germany's BASF said this month that it will permanently close its 50,000 tonne/year BDO and THF units in Ulsan, South Korea. The plants had been idled since last August.
European Q1 contract talks are underway. Prices look likely to tumble as crude and naphtha values have fallen significantly since Q4, when prices slipped by €20-50/tonne, a smaller than expected decrease, to €1,790-1,890/tonne.
A January monthly contract was agreed at €1,600/tonne, following feedstock propylene's move to a monthly settlement.
European prices remain under pressure from cheaper Asian imports. Margins deteriorated during 2008, squeezed between rocketing raw material costs and weak demand.
US Q1 contracts are also expected to fall from Q4's range of 122-137 cents/lb. In Asia, spot prices continued to slide, with small bulk cargoes selling at $1,150 CFR China in mid-January. In South Korea, the December contract price was mainly settled in the range $1,50-1,600/tonne DEL.
The first commercial route was the Reppe acetylene process. The first nonacetylene route was Japanese producer Mitsubishi Chemical's butadiene (BD) process, which makes BDO, THF, or both. US-based LyondellBasell Industries uses propylene oxide (PO) and Taiwan's Dairen Chemical uses allyl alcohol from propylene. A number of butane-based technologies were commercialized in the 1990s. A consortium has developed a biotransformation process.
The key drivers of future growth remain the THF, PBT and PU sectors. Players hope that markets will return to their traditional growth rates of around 6%/year globally, with Europe at 4%/year, and Asia at 7-9%/year, post 2009.
However, demand over the next three to five years is predicted to lag capacity and players expect a consolidation of older, and non-integrated plants. China is now self-sufficient and Asian producers will try and sell volumes to US and EU markets, sources say.
GLOBAL BDO CAPACITY, '000 TONNES/YEAR
|BASF||Geismar, Louisiana, US||135|
|BASF Petronas||Gebeng, Malaysia||100|
|Dairen Chemical||Mailiao, Taiwan||120|
|Gulf Advanced Chemical Industries||Al-Jubail, Saudi Arabia||75|
|INVISTA||LaPorte, Texas, US||110|
|Korea PTG||Ulsan, South Korea||30|
|Channelview, Texas, US||55|
|Mitsubishi Chemical||Yokkaichi, Japan||100|
|Nan Ya Plastics||Mailiao, Taiwan||100|
|Shandong Shengli Oilfield Petrochemical||Dongying, China||10|
|Shanxi Sanwei||Hongton, China*||75|
|Sichuan Tianhua||Luzhou, China||25|
|SK Energy||Ulsan, South Korea||40|
|TCC Chemical||Chiang Ping Industrial Zone, Taiwan||30|
|Tonen Chemical||Kawasaki, Japan||30|
|Xinjiang Markor Chemical||Markor Industrial Park, China||60|
|Note: *Extra 75,000 tonnes/year delayed to Q2 2009|
Profile last published April 17, 2006
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