[Industry Focus]：BDO market is good, production capacity is growing sharply, but why prices have been falling during the year

, according to the China Petroleum and Chemical Federation's latest data, due to multiple factors, it is estimated that the domestic consumption of BDO market in 2022 will be less than 1.8 million tons in 2021. As of the first half of this year, the total production capacity of domestic BDO in the next three years will exceed 6.33 million tons, and the existing and under construction capacity will be 27.868 million tons.

While there are concerns about overcapacity in the industry, BDO's enthusiasm for investment in the project has not diminished at all. Deng Huichang, deputy secretary-general of the Chemical New Materials Professional Committee of the China Petroleum and Chemical Industry Federation, and other industry insiders pointed out that the actual situation of the production end and the consumer end should be fully combined to guide BDO as soon as possible to develop related industries in a healthy and orderly manner.

BDO market

good expectations drive investment enthusiasm

BDO, also known as 1, 4-butanediol, is an important organic fine chemical raw material widely used in textile, chemical, pharmaceutical and other fields. Because its downstream involves the production of spandex required for epidemic prevention materials, it can degrade the plastic PBAT and the lithium battery auxiliary material PVP in the field of new energy, the prospect is of great concern.

the data show that since 2020, BDO market demand has risen sharply, including the 2021 average price is 25152 yuan/ton, up 171%, the year-on-month increase of 31000 yuan/ton directly refreshed nearly a decade of record.

, BDO why suddenly so hot? In Deng Huichang's view,

one is the whole industry in 2019 years ago suffered a serious loss, resulting in a serious loss BDO production enterprise long-term operation load is low;

Second

2020 years after the outbreak, foreign equipment parking, domestic and foreign procurement of epidemic prevention materials, driving epidemic prevention materials BDO prices rapidly;

Third, the domestic biodegradable plastic PBAT

exceeded expectations of publicity, set off BDO investment fever.

At the end of 2020, the "Regulations on the Prohibition of Disposable Non-degradable Plastic Products in Hainan Special Economic Zone" will be formally implemented. According to statistics from the Plastic Recycling Professional Committee of the China Plastics Association, China uses about 3 billion plastic bags every day, of which 1 billion are only used to buy vegetables, and the annual use exceeds 4 million tons. In the eyes of many investors, Hainan's measures may indicate that the implementation of the national plastic ban is coming, behind which is the 100 billion blue ocean market.

, some analysts said that in addition to downstream disposable plastic bags, PBAT demand in the field of plastic film is also rising. Taking into account the downstream transformation and product technology, equipment development gradually mature, production growth is relatively flexible, the future PBAT consumption still has room for improvement, BDO market is also optimistic about capacity release.

global new energy field PVP is expected to be the main supplier of this year's series of products will be new open source. PVP sells 2000 tons in the new energy sector. According to the investment of new energy battery capacity and the intention to communicate with customers, it is expected that in 2023 it will reach two to three times this year.

BDO is becoming the construction project of choice for local governments. At present, Ningxia, Inner Mongolia, Xinjiang, Shaanxi, Sichuan and other provinces are strengthening BDO,PBAT industry chain investment efforts.

the BDO market is subject to multiple factors that are expected to be difficult to deliver.

is in sharp contrast to the investment boom. BDO started from 2022 this year. BDO continued to make profits under the influence of weak downstream demand, and fell into a comprehensive loss in the second quarter. In August, prices fell below the cost line, the industry cut production increased, and the weekly operating load fell to 29%. Data show that the average price of BDO in the East China market in the third quarter was 12826 yuan/ton, down 46%.

, some analysts believe that in 2022 China BDO with the global epidemic control gradually liberalized, market consumption will decline, mainly because the BDO's largest downstream spandex market weakened, consumption decreased.

, Deng Huichang pointed out that due to high production costs, insufficient effective supply, lack of product identification standards and other factors, degradable plastics cannot be promoted in the actual consumer market, further restricting BDO to release downstream production capacity.

According to people familiar with the

, this year, the PBAT industry as a whole is low, especially since the second half of the year, the operating rate has dropped to 10%, and the annual output is expected to be slightly lower than last year.

understand that the market price of BDO is around 9800 yuan/ton, while the cost price is around 12000 yuan/ton. Because there are many new capacity enterprises in BDO this year, the industry supporting facilities and industry operation experience are insufficient. With the release of new production capacity, the possibility of vicious competition increases, and the risk of safe operation also increases.

"Part of BDO upstream capacity is insufficient, and the main raw materials for BDO production (calcium carbide, methanol) need to be mined or transported over long distances. At the same time, part of BDO downstream capacity extension chain has no long-term competitive advantage, further exacerbating the industry's difficulties." Deng Huichang said.

the BDO market still needs to be strengthened guidance

According to data from the China Petroleum and Chemical Industry Federation, as of the first half of this year, there were 27.868 million tons of domestic BDO, of which the existing production capacity was 2.17 million tons and the production capacity under construction was 4.163 million tons. PBAT has a capacity of 516000 tons, 3.85 million tons under construction and 17 million tons planned, with a total output of more than 21 million tons.

Deng Huichang pointed out that BDO consumption is not expected to exceed 5 million tons by 2030. Once the proposed capacity of BDO and PBAT is completed, together with the existing capacity, 80% of the total capacity is expected to be overcapacity.

, the interviewed enterprises and industry insiders suggested that it should be fully combined with the actual situation of the production side and the consumer side, as soon as possible to guide BDO healthy and orderly development of related industries.

is on the production side. For BDO in centralized production areas, policy guidance should be adopted to promote the merger and integration of enterprises with advantages in the promotion and application of downstream emerging industrial chains. On the consumer side, guide BDO downstream PBAT and PBS to wait for the green development of degradable materials, and guide GBL to regulate the operation of the new energy vehicle industry.

for the development of degradable plastics, industry insiders suggest that as soon as possible the national promotion of degradable plastics laws and regulations, the use of degradable plastics into public welfare undertakings, promote degradable plastics market applications, solve some problems BDO new overcapacity.

in addition, various industry associations should give full play to their role, actively organize existing and new enterprises to pay attention to safety and environmental protection, energy consumption, technological improvement, product structure, capacity release and other aspects, strengthen industry self-discipline, and promote innovative development.

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