Chemical profile: US BDO

24 January 2014 09:54  [Source: ICB]


Butanediol (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 was steady in US markets throughout most of 2013, with adequate supply for all sectors of the market. The threat of new capacity coming online in Asia has been strong enough to have North American producers concerned about potential oversupply, if shipments start heading to the Americas.

US BDOHowever, this has not happened in substantial volumes, although some offers of Asian material appear from time to time. The largest buyers in the US market, who frequently have a feedstock-based formula to determine prices, have not found import prices attractive enough.

The impressive recovery of the US auto industry has helped stabilise BDO markets in the region by boosting demand of PBT.

The US construction industry has had a slower recovery, but has been headed in the right direction to keep demand for thermoplastic polyurethanes (TPU) at decent levels.

Demand from Asia has been flat through most of 2013 and, as a result, operating rates in China have been hovering around 50-60%.

US production was mostly steady in 2013, with some maintenance turnarounds at the beginning of the year that helped tighten a slightly oversupplied market.


BDO contract prices declined throughout 2013 with every quarterly negotiation, but the pace of decline has become smaller in the most recent settlements, to the point that 2014 Q1 BDO price negotiations could bring a rollover or a small price increase, if producers get their wish.

Buyers are not ready to see prices headed up again and are sure to oppose the increase initiatives, although many concede that feedstock costs are higher and likely to impact BDO price formulas.

Producers have nominated increases as high as 5 cents/lb for BDO and slightly higher values for derivatives such as THF.

US buyers contend that conditions have not improved enough for prices to go up, a fact evidenced by ample supply of product in the US. Initial Q1 settlements heard for 2014 have resulted in a rollover, considered by many to be most likely outcome.


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. LyondellBasell uses a three-step conversion of propylene oxide (PO), which was developed in conjunction with Kuraray.

Newer processes use maleic anhydride (MA) or n-butane as starting points. BP Chemicals and 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 fluidised 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.

LANXESS has already produced bio-based polybutylene terephthalate (PBT) in a commercial world-scale plant for the first time, using 1.4-BDO made from renewable feedstock from Genomatica.

BASF has also successfully produced BDO from renewable feedstock in similar tests.


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 are optimistic that market conditions could improve in 2014 with the recovery of US markets and promising conditions in the European market, but global economic uncertainty persists.

In particular, proliferation of BDO plants in Asia at a time of reduced demand from the spandex sector could bring more competition to western markets.

Asian plants are already working at reduced rates. Most projects under construction are located in Asia and could increase 2014 supply by nearly 500,000 tonnes/year if the projects remains on schedule.

Another factor that may play into the North American BDO market is the emerging bio-BDO sector, although it remains to be seen how many of these plants will be built in view of the current proliferation of conventional hydrocarbon-based BDO plants.

By: George Martin
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