As Chinese producers assimilate foreign BDO technologies, master production processes, and enhance them, the capacity of individual BDO facilities has been ramped up, contributing to rapid growth in the Chinese BDO industry. In 2021, with the vigorous implementation of China’s dual carbon policy, downstream industries such as spandex, GBL, and biodegradable plastic PBAT have experienced rapid growth in demand. With rising demands and higher expectations, new capacities in China soared. The BDO industry has experienced explosive capacity expansion since 2022. By 2024, China’s BDO capacity has rapidly surpassed 4 mtpa.
However, currently, Chinese BDO market is clearly oversupplied, presenting a situation of intense competition and declining product prices. BDO prices fell to the lowest level in September 2024, averaging around CNY 7,200/tonne, marking a drop of over three times compared to the peak average price of CNY 31,000/tonne recorded at the end of 2021. Although prices have rebounded slightly since October due to many facilities being shut down, the market is still under pressure and lacking an upward momentum.
Due to low margins, some businesses have begun to repurpose BDO facilities for manufacturing other products in pursuit of higher returns. On May 13, 2024, Yussen Group held a performance briefing, announcing that due to BDO oversupply, their BDO facility is planned to be restructured to produce other products, that is producing ethanol and sec-butyl alcohol through the hydrogenation of sec-butyl acetate. The intermediate sec-butyl alcohol is further dehydrogenated to produce butanone, showing better benefits. As of October 16, the sec-butyl acetate hydrogenation process optimization project for butanone production of HuiZhou Yussen New Material Co., Ltd., a subsidiary of Yussen Group, has entered the trial production phase. After installation and commissioning of relevant equipment, optimization and adjustments of technical parameters, the facility now yields qualified products. The project, repurposing an integrated facility producing 100 ktpa of butanone and 130 ktpa of ethyl acetate, along with a 120 ktpa BDO facility, has achieved a capacity of 100 ktpa of butanone and 65 ktpa of ethanol. This project uses the hydrogenation process of sec-butyl acetate to produce butanone and introduces the company’s self-produced catalyst for the first time. Now the catalyst demonstrates good performance and the facility is running steadily.
It is worth noting that many BDO projects proposed or under construction in China are yet to be fully implemented, while demand growth in downstream industries such as elastomers, biodegradable plastics and pharmaceuticals is expected to struggle to keep up with feedstock supply increments, indicating ongoing pressures on BDO suppliers. Several upcoming BDO facilities, with a combined capacity of more than 800 ktpa, are expected to push China’s BDO capacity to exceed 5 mtpa in the near future.
China’s New and Upcoming BDO Facilities at a Glance
Xinjiang Xinye Energy Chemical’s 200 ktpa BDO Project Phase II
Xinjiang Xinye Energy Chemical’s 200 ktpa BDO project is located in the expanded work area of Wujiaqu Industrial Park. The project is scheduled to produce 500 ktpa of methanol, 200 ktpa of BDO, 100 ktpa of methanol-based aromatics, and 192 ktpa of liquefied natural gas.
The first-phase 60 ktpa BDO project was completed and put into operation in 2019, with smooth operation and achieving planned production efficiency. The second-phase 140 ktpa BDO project, with a total investment of CNY 2 billion and a construction period of 18 months, started commissioning in mid-October and is expected to be put into operation in early December.
Anhui Hwasu’s 120 ktpa Biodegradable New Materials Project
Anhui Hwasu’s 120 ktpa PBAT project is located in the Dingyuan Salt and Chemical Industry Park in Chuzhou City, Anhui Province. With a planned investment of CNY 2.4 billion, the new plant covers an area of around 260,000 sq.m, with production commencement date yet to be determined.
The project includes a 160 ktpa 55wt% formaldehyde facility, a 100 ktpa BDO facility, and a 120 ktpa PBAT facility, along with supporting facilities. The formaldehyde facility uses Johnson Matthey’s iron molybdate catalyst for methanol-formaldehyde production; the BDO facility uses the modified acetylene method by Frontech Hong Kong; and the PBAT facility uses Shanghai Joyou Chemical’s one-step process. The BDO facility is expected to start production by the end of November.
Ningxia Weiyuan’s High-Performance Lithium Battery Materials Project Phase I
Project Location: Ningdong Energy Chemical Base (New Chemical Material Park)
Investment Amount: CNY 5.243 billion, including CNY 300 million for environmental protection
Project Entity: Ningxia Weiyuan New Energy Co., Ltd.
Land Area: 683,300 sq.m
Project Content: Production workshops for manufacturing acetylene, formaldehyde, BDO, GBL, NMP and others, as well as supporting facilities such as methanol hydrogenation unit, hot oil heat transfer station, circulating water field, tank farms, loading and unloading facilities, sulfuric acid regeneration unit, rotary kiln incinerator, wastewater treatment station, and hazardous waste storage area. The project will produce products such as methylamine, BDO, GBL and NMP, with a total capacity of 599.1 ktpa.
The 120 ktpa BDO facility is currently in operation, with products to be yielded in mid or late December.
800 ktpa Functional Materials Integrated Industry Chain Project
Project Entity: Sichuan Yongying New Material Co., Ltd.
Project Location: Nanchong Economic Development Zone
Investment Amount: CNY 10.43 billion
Construction Period: 34 months
Project Content: The Phase I project is divided into A and B lines. Line A includes a 50 ktpa acetylene facility, a 11.2 ktpa acetylene hydrogen facility, two 240 ktpa formaldehyde facilities, and a 150 ktpa BDO facility. It also includes supporting facilities for air separation, circulating water, exhaust heat recovery, organic tar heat recovery and hazardous waste storage, as well as a R&D center, control center, logistical center, and others. The construction area of Line A is 103,027 sq.m. Line B involves a 50 ktpa acetylene facility, a 11.2 ktpa acetylene hydrogen facility, a 240 ktpa formaldehyde facility, a 150 ktpa BDO facility, a 60 ktpa PTMEG facility, and a 60 ktpa PBAT facility. Supporting infrastructure includes air separation and circulating water facilities, with a total construction area of 26,019.86 sq.m.
The 150 ktpa BDO facility is expected to start production in late December.
Biodegradable Materials Integrated Project (200 ktpa of BDO, 160 ktpa of NMP and 30 ktpa of PBAT)
Project Entity:Hualu Hengsheng (Jingzhou) Co., Ltd.
Project Location: No. 1 Hengsheng Road, Coal and Electricity Port Chemical Industry Park, Jiangling Economic Development Zone
Project Content: A 200 ktpa BDO facility, a 30 ktpa PBAT facility, a 100 ktpa NMP facility and other related facilities.
The BDO facility is expected to start production early next year.
Shandong Lianmeng Chemical’s PBAT/PBS Biodegradable Plastics Integrated Project
The project site occupies a land area of around 407,000 sq.m and possesses three new production lines with 561 purchased facilities. Once completed, the plant will be capable of producing 200 ktpa of maleic anhydride, 100 ktpa of BDO and 60 ktpa of PBAT/PBS, generate revenues of CNY 3.15 billion and pre-tax profits of CNY 1.24 billion annually.
The first-phase 100 ktpa BDO project, with an investment of CNY 600 million and a land area of 67,000 sq.m, is fully automated to achieve “dark factory” standards. With pioneering continuous polymerization process developed in collaboration with Dalian Institute of Chemical Physics, Chinese Academy of Sciences, Shandong Lianmeng Chemical enables a single facility to produce six different products. Production is expected to start in December.
