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Global and China 1,4-Butanediol (BDO) Industry

- Jan 06, 2018 -

1,4-butanediol (BDO) is a key raw material for organic and fine chemicals, capable of generating various derivatives like THF, PTMEG and GBL. BDO and its derivatives find wide application in PBT plastics, spandex, polyurethane, pharmaceuticals and cosmetics. 

Spurred by downstream demand, global BDO capacity enlarged steadily in recent years and reached 3,990kt/a in 2016, with a CAGR of 13.5% during 2010-2016. However, saturating of BDO demand in American and European markets will retard expansion of BDO capacity worldwide. It is predicted that global BDO capacity will grow at a pace of 3%-6% during 2017-2021. 

Global BDO capacity largely lies in Asia, especially in China which seized 2,079kt/a BDO capacity (a 52.1% share of global total) in 2016, with a CAGR of 35.3% during 2010-2016, being the key contributor to global BDO capacity growth. Nevertheless, most Chinese players have been in the red for a long time for excessive expansion of BDO capacity in China further intensified oversupply in the market and slowdown of downstream demand growth led to operating rate below 50%. As a result, China's BDO capacity expansion will gear down with a growth rate of 5%-8% during 2017-2021.


Global BDO market has a relatively stable competitive pattern and a high concentration due to high technical barriers and limited sources of raw materials. Main producers include: foreign companies such as BASF, LyondellBasell and ISP; Taiwan-based Dairen Chemical and Nan Ya Plastics; Markor Chem, Xinjiang Tianye, Shanxi Sanwei, etc. in Mainland China. As of June 2017, the world's top3 players by capacity were BASF, Dairen Chemical and Markor Chem, together sharing 39.0% of global total capacity. 

China's BDO price presented a fluctuating downtrend due to overcapacity in recent years. The price did not pick up until the end of 2016, and returned to the level of 2014 (around RMB12,200/ton) in June 2017. Tight supply constituted the main reason for recovery in price: explosion of an abandoned catalytic storage tank of SINOPEC Great Wall Energy and Chemical, halted production of the company's BDO plants for almost three months in the second half of 2016; Markor Chem and Xinjiang Tianye then stopped production and overhauled their BDO plants in succession. 

By downstream application, PTMEG, PBT and GBL took up 92% of total BDO demand in China in 2016, of which PTMEG had the biggest demand, a 43% share of the total. Pulled by capacity expansion, PTMEG's demand for BDO will grow at a rate of about 10% during 2017-2021.


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