23 September 2013 00:00 [Source: ICB]
N-butanol (NBA) is a solvent with a variety of chemical, industrial and retail end-uses. More than half of production is used as an intermediate chemical in the production of butyl acrylates for paints, coatings and adhesives or to formulate acetates and glycol ethers, as well as direct use as an industrial solvent.
Butyl acetate production accounts for about one-fifth of global NBA demand while glycol ethers and acrylates account for about 15% each.
Other uses include plasticizers, amino resins and butyl amines and in pharmaceuticals, textile manufacture, polymers, food ingredients, inks, herbicide esters, automotive products and as a reactant in urea-formaldehyde resins for the production of melamine.
Demand in Europe has been balanced with strengthening downstream demand for glycol ethers and acrylates.
China, a net importer of NBA, has been seeking to build plants and ramp up capacity. In the third quarter, US-based Dow Chemical in partnership with UK-based Matthey Davy Technologies, announced the license of the Davy Oxo LP Technology to a giant oxo-alcohols project in Guangdong for PetroChina. It is the fourth project since 1986 between the western partnership and PetroChina and will bring 235,000 tonnes/year of n-butanol to the region.
Supply has become a nagging problem in the US as more chemical plants turn to natural gas rather than petroleum as a feedstock, increasing price pressures.
Northeast Asia dominates production, with South Korea and Japan producing an estimated 1.6m tonnes/year.
When added to planned Chinese production, that is expected to grow by 50% by the end of 2015. North America produces an estimated 1m tonnes/year with Europe (780,000 tonnes) and the former Soviet Union (200,000 tonnes) following.
Prices rose steadily through the second half of 2012, but peaked in the first quarter of 2013 and then backed down. The US oxo-alcohols contracts for September settled up an average 3 cents/lb ($66 tonne) as producers began a price initiative of a 2 cents/lb increase for October.
Eastman Chemical, Oxea, Dow Chemical and other producers mid-August announced price increases averaging of 3 cents/lb for NBA, isobutanol (IBA) and 2-ethyl hexanol (2-EH). Eastman announced 4 cent/lb increases for all three products, Dow announced 3 cents/lb for all three and Oxea announced 3 cent/lb increases of NBA and IBA.
Eastman has announced its intention to raise prices on all three solvents by 2 cents/lb ($44/tonne) for October delivery.
The producers have cited increased cost and decreasing availability of feedstock propylene for the increases. Spot propylene prices were at a five-month high the last week of August, but a week later the contract settled at a rollover for September.
Most commercial production is through the oxo process, comprising the catalytic hydroformylation with carbon monoxide and hydrogen (syngas), followed by the hydrogenation of the aldehydes formed to produce a mixture of iso- and n-butanols.
It is estimated that more than 90% of global production is based on the low-pressure process developed by the UK’s Davy Process Technology, in collaboration with US-based Union Carbide. Anglo-Dutch petroleum company Shell has a one-step process that converts propylene directly into butanol, isobutanol (IBA) and 2-ethylhexanol (2-EH).
In fourth quarter of 2013, three large production units are expected to come on line in China that may produce 300,000 tonnes/year.
More production capacity in China is slated for 2014 and 2015. Demand growth is estimated at 2.1%/year through 2016.
The growth of the Chinese economy will drive much of the new demand in the near term while the settling down of the eurozone debt crisis is expected to help stabilise demand in Europe.
US demand is growing gradually, along with the US economy’s slow rebound from the depths of the credit crisis. A large backlog of foreclosed homes and only gradual recovery of the residential and commercial construction industries has suppressed demand in the paints and coatings sectors.
The emergence of bio-butanol, made from plant material, sugars and cellulosic materials, could become market threats to n-butanol. But any threat will likely be three to five years away when a sustainable market presence for the bio-products may be established.
Companies such as Green Biologics, Sovert, Butamax, Cathay Industrial Biotech, Cobalt Technologies are pursuing bio-processes that yield n-butanol in smaller volumes.
Major manufacturers using the traditional processes include, BASF, Sasol, Dow Chemical, Oxea, BASF, Eastman Chemical, Shell and ExxonMobil.
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