Asian BDO Prices Likely to Continue Downtrend, Producer’s Focus Shifts Towards Bio-Based BDO Production

Since the beginning of Q2 this year, a continuous slump in the Butanediol (BDO) prices can be observed. The trend is likely to continue even in Q3 with the Asia pacific region witnessing constant decline in coal demand and hike in capacity utilization rates for BDO. Decreasing prices for BDO means that downstream producers can increase their margins.

China is the largest manufacturer of BDO, and it is also one of the largest importers of the material as well. As per import-export analysis by ChemAnalyst, China’s BDO imports stood around 1,96,340 metric tonnes in 2020. Taiwan and Germany were the top two BDO exporters last year.

Traditionally, 1,4 Butanediol has been produced by the Reppe Synthesis Route which was first applied in 1930s in Germany which used Acetylene as feedstock, as the method was developed by BASF, it enjoys the monopoly for decades which was eventually curtailed by Mitsubishi Chemicals in the late 1970s where the latter used Butadiene as the key feedstock. Since then, new methods have been developed where Arco Chemical formulated a method to use Propylene Oxide as feedstock while companies like BP Chemical and Davy developed routes through Maleic Anhydride and its derivatives.

According to ChemAnalyst Market Analysis, China is heavily dominated by the Reppe technology where out of 23 BDO producing facilities, 17 are reliant on the most traditional technology of production. BDO is a building block of several high value products with Tetrahydrofuran (THF), γ-butyrolactone (GBL), Polybutylene Terephthalate (PBT) and polybutylene adipate terephthalate (PBAT) accounting for more than 80% of the demand share.

In the recent times, a movement has been made towards increasing the global sustainability of BDO, a key ingredient in the polyester and highly versatile spandex production chain. Players are putting conscious efforts for changing BDO production methods from fossil-fuel based to biodegradable. A step in that direction has been a recent joint venture between Cargill and Helm which will build a commercial scale, 65 KTPA renewable 1,4 Butanediol facility in Iowa, USA. This facility will form the USA’s first biobased BDO plant, after Canadian BioAmber trailblazed in 2012 and Italian company Novamont followed suit in 2016 with 30KTPA capacity.

According to Qore (the Cargill and HELM JV) estimates, QIRA, the next gen-BDO produced from plant-based sugars will reduce the greenhouse gas (GHG) emission levels by 93% compared to the conventional methods of production. Although complete substitution of fossil fuels by biobased materials may take time however, formation of this joint venture is a colossal step in the history of BDO.

After addition of this facility, the global capacity for biobased BDO global will reach around 100 KTPA which will be a monumental step in moving towards sustainability for petrochemical products.