Yan Feng

Since 2021, China’s upgraded plastic-bag ban has generated series of degradable plastic requirements such as PBEAT, PBS, whose raw material-1,4-butanediol (BDO) witnessed a spike in demand.

Production status

China’s BDO capacity has expanded steadily in recent years, reaching 3 453 kt/a by the end of October 2023 (hereinafter referred to as 2023).

In 2023, China’s BDO capacity was distributed intensely in Northwest and North China with rich acetylene, of which the former (including Xinjiang, Shaanxi and Ningxia) owned 2 016 kt/a, accounting for 58.38% totally, and the latter had (including Inner Mongolia) 692 kt/a, holding 20.04% totally. Moreover, Southwest China (including Sichuan province and Chongqing city) occupied the capacity of 245 kt/a, with 7.10% generally, Northeast China (including Liaoning province) 150 kt/a, holding 4.34% of the total, East China (including Jiangsu province) 50 kt/a, occupying 1.45% generally, Central China (including Henan province) 260 kt/a, holding 7.53% totally, South China (including Fujian province) 40 kt/a, accounting for 1.16% totally. Based on the data shown above, Xinjiang was the biggest BDO capacity region, with 1 234 kt/a, followed by Inner Mongolia (692 kt/a), and Ningxia (432 kt/a). 

Currently, China’s BDO is exclusively produced by acetylene aldehyde (Reppe) and propylene oxide methods. Except Dairen Chemical (Jiangsu) Co., Ltd. and Changchun Chemical (Panjin) Co., Ltd. adopt propylene oxide method, the rest applied Reppe. In 2023, the capacity of China’s BDO by Reppe was 3 253 kt/a, holding 94.21% generally, while the capacity via the other means was 200 kt/a, occupying 5.79% totally. Dongyuan Scien-tech Group Co., Ltd. is the largest BDO maker in China with a capacity of 380 kt/a, followed by Makor Chem Co., Ltd. with a capacity of 360 kt/a and Inner Mongolia Huaheng Energy Co., Ltd. with a capacity of 312 kt/a.

Many of current Chinese BOD enterprises have downstream production equipment, with PBT, PTMEG and PBEAT equipment from Xinjiang Lanshan Tunhe Technology Co., Ltd., PTMEG equipment from Henan Energy Group Hemei Investment Co., Ltd., Changchun Chemical (Panjin) Co., Ltd., Chongqing Jianfeng Industrial Group Co., Ltd. Chiyuan Chemical Branch, Sichuan Tianhua Fubang Chemical Co., Ltd., Xinjiang Guotai Xinhua Chemical Co., Ltd., Shaanxi Yanchang Petroleum (Group) Co., Ltd. Additionally, Sinopec Great Wall Energy and Chemical (Ningxia) Co., Ltd. has THF and PTMEG equipment, Henan Kaixiang FINE Chemical Co., Ltd. has THF, PBT and PBAT equipment, Xinjiang Makor Chemical Industry Co., Ltd. has THF, PTMEG and GBL equipment, Shaanxi Bidiou Chemical Industry Co., Ltd. has PTMEG and GBL equipment, Wanhua Chemical (Sichuan) Co., Ltd. has PBAT equipment, and Fujian Meizhouwan CHLOR-ALKALI Chemical Industry Co., Ltd. has PBT equipment.

The key catalyzer of China’s BDO production process has also been localized. And BYD synthetic catalyzer of RK-17 (Oxide-based) was successfully applied into BDO equipment in Henan Kaixiang FINE Chemical Co., Ltd.

Consumption status and development outlook

China’s BDO is mainly used in the production of THF/PTMEG, PBT and GBL. The consumption structure in 2022 was as follows: THF/PTMEG’s demand for BDO occupied 51.8% of total consumption, PBT 22.1%, GBL/NMP 15.1%, polyurethane (PU) 4.9%, PBS/PBAT 4.4%, and others 1.7%.

In 2022, the capacity of THF was 221 kt/a, PTMEG 1 033 kt/a in China. In the next few years, several Chinese companies will build, expand or launch PTMEG equipment, including Inner Mongolia Sunway New Materials Co., Ltd., Ningxia Guanneng New Material Technology Co., Ltd., Inner Mongolia Huaheng Energy Technology Co., Ltd., Sichuan Yongying New Material Co., Ltd., Hengli Petrochemical (Dalian) New Material Technology Co., Ltd., China Coal Shaanxi Yulin Energy Chemical Co., Ltd., Shandong Hengxin Group Co., Ltd. China’s THF/PTMEG demand for BDO is expected to be 1 550 kt in 2027.

In 2022, China’s PBT capacity was 1 560 kt/a. And with more use of plastics in the vehicle and energy-saving lamps of electrical industry, the research and development of PBT’s various modification technology will be a driver for BDO consumption in the future. Kanghui New Material Co., Ltd., Henan Kaixiang FINE Chemical Co., Ltd., and Ningbo Changhong Polymer Scientific and Technical Co., Ltd. will build or expand the production equipment. China’s PBT demand for BDO is projected to be 600 kt in 2027.

In 2022, China’s GBL capacity was 380 kt/a. And in the next few years, the enterprises building or expanding production equipment involve Wuheng Chemical Technology (Ningxia) Co., Ltd., Hohhot Xingtai New Material Technology Co., Ltd., Hengli Petrochemical (Dalian) New Material Technology Co., Ltd., China Coal Shaanxi Yulin Energy Chemical Co., Ltd., and Wuheng Chemcial Technology (Ningxia) Co., Ltd. In the same year, China’s NMP capacity was 500 kt/a, and the continuous growth of new energy vehicles will drive up the demand of NMP. Therefore, Weinan Meiteri Technology Co., Ltd., China Pingmei Shenma Group Co., Ltd., Fujian Puquan New Energy Technology Co., Ltd., and Xinmaiqi (Zhongshan) Material Technology Co., Ltd. will build or expand production equipment. And China’s GBL/NMP demand for BDO will reach 500 kt in 2027. 

With released plastic-bag ban and increased green-consumption, biodegradable materials including PBEAT are promising, which will facilitate BDO consumption. And China’s PBEAT capacity in 2022 was 720 kt/a, with major makers such as Xinjiang Lanshan Tunhe Technology Co., Ltd., Zhuhai Kingfa Biomaterial Co., Ltd., Shandong Ruian Biotechnology Co., Ltd., and Wanhua (Sichuan) Co., Ltd. And the enterprises building or expanding PBEAT equipment in the next few years include Shandong Ruifeng Chemical Co., Ltd., Anhui Haoyuan Chemical Group Co., Ltd., Shandong Dawn Polymer Co., Ltd., Jiangsu Eastern Shenghong Co., Ltd., Anhui Hwasu Co., Ltd., Inner Mongolia Sunway New Materials Co., Ltd., Shanxi Tond Chemical Co., Ltd., Wuheng Chemical (Ningxia) Co., Ltd., Guangxi Hongyuan Technology Co., Ltd., and Ningbo Changhong Polymer Scientific & Technical Co., Ltd. China’s PBS capacity was 186 kt/a in 2022. And Xi’an Changqing Tongxin Petroleum Technology Co., Ltd., Hebei Bohang New Material Co., Ltd., Fuzhou Wanjing New Material Co., Ltd., Shaanxi Coal Chemical Industry Group Xinjiang Co., Ltd., and Anhui Sealong Technology Co., Ltd. will launch PBS equipment in the coming years. China’s PBS/PBAT demand for BDO will be 800 kt in 2027.

With the application demand in other fields, China’s BDO demand will be 3 700 kt in 2027.

And China’s BDO price will fluctuate on a small scale in the coming period due to growing BDO supply, stable material prices and minimal changes in downstream demand.

Development outlook

(1) Regarding production technology research and development, Reppe will remain the most essential production process, with technology research being a focus in the future.

(2) Reppe-based products will mainly occupy China’s BDO market, whose effective capacity will be 9 000 kt/a in 2027. 

(3) China’s BDO new equipment in the future will be focused on abundant acetylene areas including Xinjiang, Ningxia, Inner Mongolia, Sichuan and Chongqing. And Northwest China, especially Xinjiang, will be the major new capacity area, whose regional proportion will grow. Additionally, Fujian province, with several new sets of equipment be built and launched, will be a primary new capacity area. 

(4) China’s BDO consumption will vary as a result of industrial adjustment, with THF/PTMEG remaining the major consumption areas, despite of dropping share of consumption. And as the number of NMP equipment increases, GBL areas will expand with surging consumption, which will facilitate BDO consumption. And PBAT will be a major driver for BDO consumption, but it is still worth taking PBAT demand for BDO into consideration, given the uncertainties of PBAR construction.

(5) China’s BDO imports will further decrease with growing supply, and the export will be an important way to combat overcapacity.

(6) In the future, China’s BDO production equipment will be large-scale, with more severe products homogenization. And the growth of downstream demand can’t catch up with that of capacity, with salient overcapacity. And the market will be more competitive.

(7) And China will speed up BDO industrial structure adjustment, eliminate backward production capacity, and expand exports, all of which is to make BDO products accepted by international community and be more competitive.