Chemical profile: Asia oxo-alcohols

USES
The use of oxo-alcohols Asia differs from each product, with 2-ethylhexanol (2-EH) being mainly a feedstock for key plasticizers and both types of butanols largely being used in the downstream solvent industry.

2-EH is primarily used in the production of plasticizers within Asia. These plasticizers include dioctyl phthalate (DOP), dioctyl terephthalate (DOTP) and trioctyl trimellitate (TOTM). A second usage is in the manufacture of acrylate and methacrylate esters, which go into adhesives and coatings. 2-EH is also used as a fuel additive; as a part of 2-ethylhexyl nitrate it is added to diesel to boost the cetane number. It can also be used as a solvent or in the production of surfactants.

N-butanol (NBA), on the other hand, is used for the production of solvents. One key downstream solvent industry is n-butyl acetate, which is used in the pharmaceutical industry and also for paint and car coating purposes. It is also used in the manufacture of acrylate esters, like 2-ethylhexanol. Isobutanol is typically used by itself as a coating agent in the furniture and automotive sectors.

SUPPLY/DEMAND
For the March-April period, demand is set to be strong amid turnarounds at some key plants in northeast Asia. Several buyers are looking to restock on cargoes after trading activity was limited with the decline in oil prices since Q3 2014. However, this spurt in demand is not expected to last after mid-April because there is no major increase in the demand for end-products and it would not be peak season. The paints and coatings sector typically sees a rise in demand in the hotter seasons, from early July to early September.

Supply will continue to be in abundance, with some plants in China still not operating at full tilt. Should demand increase, the possibility of producers ramping up production rates to cope with this is highly likely. Some key plants such as those by Jiangsu Huachang and Yantai Wanhua are slated to start up in the same period, further adding to the supply glut in northeast Asia.

PRICES
Spot prices of oxo-alcohols in Asia used to be largely determined by demand-supply fundamentals in the past, when China was a key importer. However, in recent years, players have been attributing the price changes to the price fluctuations in feedstock propylene.

Since August 2014, spot prices of oxo-alcohols have been falling in tandem with propylene within northeast Asia. Poor demand and unwillingness of buyers to commit to spot purchases in a falling market added on to the downward pressure on prices in Q4 2014.

On average, oxo-alcohol prices fell by 25-30% during the period. This was in comparison to around a 50% drop in feedstock prices, further highlighting the close relationship.

Following the increase in feedstock costs since December 2014, the possibility of price increases appears imminent. However, both buyers and sellers agree that poor demand and future plant start-ups would limit the upside on spot prices for 2015.

TECHNOLOGY
The production of all types of oxo-alcohols is done through the catalytic hydroformylation of propylene with synthesis gas (carbon monoxide and hydrogen), which produces normal-butyraldehyde and iso-butyraldehyde. This catalytic process typically uses rhodium catalysts rather than the older cobalt hydrocarbonyl catalysts. The two butyraldehydes are subsequently hydrogenated to make NBA and isobutanol. Separately, to make 2-EH, two normal-butyraldehyde molecules are combined and hydrogenated after a dehydration process.

OUTLOOK
The increase in supply is set to continue into 2015, with new production capacities in China and the Middle East to come online by Q2 and Q3 of the year, respectively.

Most players expect the start of the NBA plant in Al Jubail, Saudi Arabia – a joint venture between SABIC, Sadara and Saudi Kayan – to weigh on sentiment because the companies are targeting Asia as an export market.

Demand for oxo-alcohols within Asia looks to be stable with no new downstream plants set to start up because of poor economics and a supply glut for end-products. China is expected to have fewer imports in 2015 as it tries to export supply, particularly so for 2-EH producers. Exports of 2-EH from China increased almost seven times from 8,700 tonnes in 2013 to 54,100 tonnes in 2014.