01 March 2013 09:12 [Source: ICB]
Butanediol (BDO) is a colourless and almost odourless, viscous liquid. This hygroscopic diol is soluble in water, alcohols, esters, ketones, glycol ethers and glycol ether acetates; immiscible in aliphatic and aromatic hydrocarbons and diethylether.
Sizeable quantities of BDO go into the manufacture of gamma-butyrolactone (GBL), which has outlets in electronics and high-performance polymers.
Demand for BDO was reasonable although somewhat limited during the second half of 2012 as a result of reduced requirements from certain sectors.
Adverse macroeconomic conditions have had a negative impact on much of the car industry, reducing BDO requirements for the PBT sector. The building industry has also suffered as a result of the economic crisis, with BDO demand for polyurethanes also down.
In the late summer/ early autumn of 2012, neither maintenance at BASF's Ludwigshafen plant nor a shutdown at ISP's plant in Marl - both in Germany - had much impact on the market. Adverse effects were avoided through careful planning and the building of stocks prior to the shutdowns. The European market was deemed relatively balanced.
In January 2013, restocking was steady but slow. Nevertheless, some participants believed demand had exceeded expectations.
Most found it difficult to say whether this level of activity would be sustainable.
In the second quarter of 2012, the European BDO contract price increased by €80/tonne from the previous quarter to €2,200-2,240/tonne ($2,860-2,910/tonne) FD NWE. This was due to firm feedstock costs, improved demand, lower inventories and the need to sustain margins.
The price range decreased in the third quarter by €90-100/tonne on lower feedstock values, mediocre requirements and adequate availability. Contracts for the quarter were assessed at €2,100-2,150/tonne FD NWE.
In the fourth quarter there was a slight €10/tonne softening of the price range, while in the first quarter of 2013 the contract price was assessed down by €30/tonne, at €2,060-2,110/tonne FD NWE.
Participants' first-quarter price agreements generally resulted in a compromise, with buyers arguing for steeper decreases on the back of poor macroeconomic conditions and stable but not strong demand, while producers pursued softer price reductions, citing ongoing high feedstock costs.
The Europe February contract price for feedstock propylene gained €10/tonne to settle at €1,100/tonne. The European methanol contract price for the first quarter settled at €370/tonne FOB RDAM, up €30/tonne from the fourth quarter.
The first commercial route was the Reppe acetylene process. The first non-acetylene 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 commercialised in the 1990s. A consortium has developed a biotransformation process.
Looking ahead, the consensus is that the European BDO market this year is likely to be very similar to 2012, with feedstock values remaining high.
Demand for European BDO is expected to remain stable to low, as the eurozone financial crisis continues to hamper demand. BDO requirements for the PBT sector have particularly been negatively affected by the economic downturn. Polyurethanes for the building industry have also seen BDO requirements reduced. With no end in sight for the economic difficulties, these factors are likely to persist.
Beyond Europe, a growing Chinese market with new capacities coming online could have an impact on the global BDO market in 2013 and beyond. Some participants feel that the worldwide market will lengthen as demand may not be sufficient to absorb these extra volumes.
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