Brisk Demand of Neopentyl Glycol

Neopentyl glycol (NPG) is an important chemical raw material.
It is mainly used to produce saturated polyester resin for powder
coatings, unsaturated polyester resin, polyester polyols,
esters for synthetic lubricants, plasticizers and alkyd resins.
Its derivatives can also be used in spices, pharmaceuticals,
flame-retarding agents, aviation lubricants and ink insulation
materials.

  1 Stable consumption growth of product

As environmental protection laws and regulations are getting
stricter, the application of solvent-borne coatings is
restricted and the application of resins for powder coatings and
high solid component coatings is highly acclaimed. With the
expanded application and growing consumption of powder coatings
and high solid component coatings produced from saturated
polyester resins, the market demand for neopentyl glycol has
grown rapidly. The apparent consumption for neopentyl glycol in
China was 38 thousand tons in 2002 and increased to 80 thousand
tons in 2006 with an average annual growth of 20.5% from 2002
to 2006. With the expansion of application sectors, the demand
for neopentyl glycol will continue to increase at an annual rate
of around 15% in the next few years.
    By the end of 2006, the total capacity of neopentyl glycol
in China was more than 85 thousand t/a but the operating rate
averaged around 51% only. The main reason for the low operating
rate is the inadequate supply of main raw material -
isobutyraldehyde. Major neopentyl glycol producers are
distributed north of the Yangtze River, mainly in Shandong
province. Production methods include the sodium formate process
and the condensed hydrogenation process. Most foreign producers
presently use the hydrogenation process. Using the
hydrogenation process to produce neopentyl glycol can avoid the
generation of great quantities of byproduct- sodium formate and
increase the product yield. Neopentyl glycol producers in China,
however, have outdated production technology. Only BASF- JCIC
Neopentylglycol Company Ltd. uses the condensed hydrogenation
process. All other producers use the sodium formate process.
    With the rapid increasing capacity, the neopentyl glycol
output in China has increased constantly. The output reached 44
thousand tons in 2006, an increase of 8 thousand tons over 2005.
    Neopentyl glycol has a supply deficit in China and the gap
has to be bridged by imports. The import amount presents a rising
trend. The net import amount reached 36 thousand tons in 2006,
an increase of 4 thousand tons over 2005.
    Most downstream users in the Pearl River Delta use imported
neopentyl glycol as raw material, producing a considerable
impact on the domestic production. According to some downstream
users, neopentyl glycol in some local producers has defects when
it is used in the production of high-grade resins and the product
quality needs to be improved.

  2 Supply deficit of raw material

Main raw material - isobutyraldehyde for the neopentyl glycol
production in China is a byproduct in the butanol/octanol
production. The total capacity of butanol/octanol in China is
close to 1.0 million t/a today. There are 5 major producers
including Sinopec Qilu Petrochemical Company Ltd. (314 thousand
t/a), CNPC Jilin Chemical Co., Ltd. (240 thousand t/a), BASF-YPC
Co., Ltd. (225 thousand t/a), CNPC Daqing Petrochemical Company
Ltd. (80 thousand t/a) and Beijing Dongfang Petrochemical
Company Ltd. (70 thousand t/a). The isobutyraldehyde output is
around 150 thousand tons a year. As some butanol/octanol
producers use isobutyraldehyde to produce plasticizers, the
commodity amount of isobutyraldehyde in the market is
inadequate.

Table 1  Production and Consumption of Neopentyl Glycol in China
from
                    2002 to 2006              (thousand tons)
Year                  2002     2003    2004    2005    2006
Output                   20     24         28         36         44
Net import           18     28         29         32         36
Apparent consumption   38     52         57         68         80
Source: CNCIC

Table 2  Major Neopentyl Glycol Producers  in China         
(thousand t/a)
Producer                                        Capacity
BASF JCIC Neopentylglycol Co.                           25
Shandong Linzi Yongliu Chemical Industry Co.           20
Shandong Guanghe Fine Chemical Co.                   10
Shandong Dongchen Group                                    7
Zibo Shaohua Industrial Co.                            6
Shandong Plastic Products Experimental Factory            5
Shandong Weifang Shanhe Chemical Co.                    5
Shandong Feicheng Lutai Science & Technology Co.    3
Jingmen Longsen Chemical Co.                            3
Source: CNCIC