20 February 2012 00:00 [Source: ICB]
BDO is a chemical intermediate used in the production of polymers, solvents and fine chemicals.
The largest consumer is tetrahydrofuran (THF), used to make polytetramethylene ether glycol (PTMEG) which goes 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 and high-performance polymers.
BDO demand has been strong throughout most of 2011, but softened late in the fourth-quarter because of end-of-year destocking. Demand stayed soft heading into the first quarter of 2012 as market participants took a wait-and-see approach with the Lunar New Year holiday in January.
North American BDO sources said they should have a clearer picture of how the global supply/demand picture will play out after the Lunar New Year holiday, as Asian trade participants returned to the market.
Some supply will be taken offline in the first quarter of this year as BASF takes down its BDO plant in Geismar, Louisiana, US for five weeks in February. The BDO production will be down as part of a broader plant-wide turnaround.
Another North American producer has said it may also take a turnaround late in the fourth quarter of 2012. The producer added that plans were not official yet, and it could move the turnaround to a later date in early first quarter of 2013.
BDO contract prices gradually increased throughout 2011 as a result of tight global inventories, stronger raw material cost and strong demand.
The tight global market eventually led North American BDO contract prices to hit a record high range of 154-172 cents/lb ($3,394-3,792/tonne, €2,579-2,882) in the fourth quarter of 2011.
Despite ending 2011 with record highs, BDO contract prices have come off the first quarter of 2012 because of softer demand, especially for BDO derivative markets such as THF and PBT. Some consumers also attributed the decline in prices to weaker feedstock prices, such as propylene, which saw declines for November and December contracts, and no problems in sourcing material.
A number of process technologies are available for the production of BDO. The traditional method is the Reppe process, where acetylene is reacted with formaldehyde. Netherlands-based LyondellBasell uses a three-step conversion of propylene oxide (PO), which was developed in conjuction with Japan-based Kuraray.
Newer processes use maleic anhydride (MA) or n-butane as starting points. UK-based BP Chemicals and German engineering firm Lurgi together developed an integrated butane-to-BDO process called Geminox, which combines BP's process for catalytic oxidation of butane in air using a fluidized bed with Lurgi's fixed-bed fatty acid hydrogenation technology.
This process is used at Ashland's plant in Lima, Ohio (formerly International Specialty Products (ISP), which previously bought the plant from BP Chemicals). Ashland bought ISP in mid-2011.
Meanwhile, the newest technology being developed is a potential bio-based synthetic pathway, which mostly relies on succinic acid derived from biomass or a sugar substrate. A conversion from this bio-succinic acid to BDO can be achieved using the conventional MA-based process, or the Davy approach.
US-based BioAmber partnered with Mitsui & Co. in November 2011 to build and operate a manufacturing facility in Sarnia, Ontario, Canada, which will initially have a production capacity of 17,000 tonnes of bio-succinic acid.
Commercial production will begin in 2013. Later planned expansions will bring capacity at the facility up to 35,000 tonnes of bio-succinic acid and 23,000 tonnes of BDO. BioAmber has been operating a large-scale bio-succinic acid facility in France since 2010.
Although market participants have acknowledged that the spandex segment has seen softer demand of late, they have noted that the PBT segment continues to see support from a renewed automotive industry.
Trade participants have been reluctant to state their positions on 2012, because of the global economic uncertainty.
Market sources have also said that it was still too early to discuss second-quarter contract negotiations.
Another factor that may play into the North American BDO market is the emerging bio-BDO sector.
Companies such as Genomatica, Tate and Lyle, Novamont, BioAmber and Mitsui have all announced bio-BDO projects or plans. However, much of these bio-BDO announcements have been for demonstration-scale facilities.
North American producers have acknowledged the emerging bio-BDO movement, but have said it will take time for it to be at a competitive level with non-bio BDO.
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