The slow growth of emerging fields and the shrinking of traditional downstream demand have made BDO (1,4-butanediol), which was once a hit, no longer in the spotlight.
An executive of a relevant domestic listed company told reporters: “Due to the slow growth of the much-anticipated downstream field of degradable plastics (PBAT), the original pillar downstream spandex industry has also entered an adjustment cycle this year, causing a contradiction between supply and demand in the originally hot BDO industry. It shows that although the recent logistics impact in some production areas has caused a certain rebound in the BDO industry, it is still difficult to conceal the dilemma the industry is facing today.”
However, diametrically opposed to the current status of the industry, industrial capital remains enthusiastic about investing in BDO projects. According to incomplete statistics from reporters, the annual BDO production capacity currently under construction in China is as high as nearly 20 million tons, which has also revived market concerns about future excess in the BDO industry.
Strong expectations and weak reality
As an important organic and fine chemical raw material, BDO is widely used in textile, chemical, pharmaceutical and other fields, among which the spandex industry chain has the greatest demand. But what really attracts BDO’s attention is the hundreds of billions-level blue ocean market behind degradable plastics.
Since 2020, with the release of favorable policies such as the new version of the plastic restriction order and the “dual carbon” strategy, relevant regulations and measures on “plastic bans” have also been introduced across the country, allowing the degradable materials industry to enter the fast lane. Relevant data shows that as of the third quarter of this year, the planned new production capacity of PBAT in the biodegradable field has reached an astonishing 18 million tons, and the market has therefore formed strong expectations that the downstream demand for BDO is about to skyrocket.
However, PBAT’s growth did not materialize quickly, and the gap between expectations and displays is visible to the naked eye.
A person from a relevant domestic listed company told reporters: “Since this year, although there has been a lot of new PBAT production capacity put into production, the overall operating situation of the industry is very low. Especially since the second half of the year, the operating rate of the PBAT industry has dropped to less than 10%. PBAT’s full-year production is expected to be slightly lower than last year.”
At the same time, the situation downstream of BDO’s pillars is not optimistic. “Due to the overall weakening of the textile industry downstream of spandex this year, the demand for epidemic prevention materials has also stabilized. The spandex market has suffered a ‘double kill’ of price and demand, and the industry has obvious accumulation of inventory.” said the aforementioned business person, “This has also forced Upstream raw materials give way to spandex, and the market price of BDO is easy to fall but difficult to rise.”
Choice statistics show that currently, the latest price in the BDO market in East China is about 13,800 yuan/ton, which is nearly 17,000 yuan/ton lower than the price at the beginning of the year.
Industrial capital remains enthusiastic
Although the industry situation is not optimistic, the enthusiasm of industrial capital for investment in BDO projects is still high. It is understood that industry leader Hengli also has plans for BDO. In March 2021, Hengli Energy (Yulin) New Materials Co., Ltd. passed the registration review of the 1.8 million tons/year BDO project. The project is located in Qingshui Industrial Park, Yushen Industrial Zone, Yulin City, Shaanxi Province, with a total investment of 20.8 billion yuan and planned construction of 1.8 million yuan. tons/year BDO, 180,000 tons/year PBAT, etc.
According to incomplete statistics from reporters, in addition to the 6 companies planning to put into production before the end of this year, there are still 12 BDO projects under construction, with a cumulative production capacity under construction of about 3.6 million tons/year, and 35 projects to be built, with a total production capacity of about 12 million tons. / year; in addition, there are projects that are under investigation and have not been clearly announced. According to industry estimates, the total BDO production capacity planned to be built in China is currently as high as nearly 20 million tons / year.
Faced with such a situation, the market will naturally have doubts about whether BDO has excess capacity, but some people in the industry have expressed different views.
“In fact, many BDO projects currently being planned are supporting PBAT projects. Since the industry is generally optimistic about the prospects of degradable materials, the investment enthusiasm for its core raw material BDO is naturally relatively high. The key to the change in the supply and demand relationship of the BDO industry in the future lies in The implementation speed of the BDO project is the same as the implementation speed of the PBAT project.” A senior industry person in Shandong introduced.
“What is certain is that the country’s implementation of plastic restriction orders will become increasingly strict, and more and more fields have clarified the ban on the use of non-degradable plastics. The implementation of new production capacity in the PBAT industry will also accelerate. .” said the aforementioned industry insiders.
Recently, Guan Aiguang, deputy director of the Market Supervision Department of the State Post Bureau, said at a regular press conference that by the end of 2025, postal express outlets nationwide will ban the use of non-degradable plastic packaging bags, plastic tapes, disposable plastic woven bags, etc.
At the same time, the reporter noticed that according to the “Opinions on Further Strengthening the Control of Plastic Pollution” issued by the National Development and Reform Commission and the Ministry of Ecology and Environment in 2020, non-degradable plastic products will be banned nationwide by the end of this year.It is used in shops, pharmacies, restaurants, express delivery and other places in built-up areas of cities above the prefecture level and county towns in coastal areas.
“On the other hand, the excessively high price of BDO in the early stage is also one of the factors hindering the growth of the PBAT industry. With the rational decline of BDO prices, the promotion effect of PBAT is also expected to improve, which is also a good thing for the BDO industry.” The aforementioned industry insiders expressed further.
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