GBL Will Be Oversupply

GBL (gama-butyrolactone) is a solvent with high boiling point
and excellent property and also an important fine chemical
intermediate. It has extensive applications in pharmaceuticals,
pesticides, synthetic resin assistants, food/feed additives and
dyestuffs/pigments.

1. Stable output increase

The development of GBL in China started rather late, but
considerable advances were made in the late 1980s. China already
had more than 20 GBL producers in 2005. The total capacity was
around 50 thousand t/a and the output was around 33 thousand tons.
The average annual growth of the GBL output in China was 22.5%
from 2002 to 2005.
   GBL imported from abroad accounted for around 50% of the
market consumption before 2000. As the capacity and the output
of GBL in China grew rapidly, although the import amount was
still increasing, the market share of GBL imported from abroad
reduced to around 9% in 2005.

2. Sustained demand growth

GBL in China is mainly used to produce fine chemicals such as
CPA (cyclopropyl amine), NMP (N-methyl-2-pyrrolidone), ABL
(alpha-acetyl-gama-butyrolactone), NVP
(N-vinyl-2-pyrrolidone)/PVP (polyvinyl-2-pyrrolidone) and
alpha-pyrrolidone. The consumption was around 30.1 thousand
tons in 2005. The consumption distribution was 39.9% for CPA,
26.6% for NMP, 14.0% for ABL, 10.6% for NVP/PVP, 5.0% for
alpha-pyrrolidone and 3.9% for others.

    (1) CPA
CPA is an important aliphatic amine containing a ternary ring.
It is mainly used in the synthesis of pharmaceuticals,
pesticides and fine chemicals. The consumption is quite large
in the pharmaceutical sector. In the pharmaceutical sector, CPA
is mainly used to synthesize cinrofloxacin, enrofloxacin,
sparfloxacin and enoxacin. China started the research of CPA
rather late. The work on the research and development is getting
matured today and there are already conditions for commercial
production. Third-generation quinolone antibiotics that
display strong antibacterial effect on staphylococcin and
pseudomonas aeruginosa have developed rapidly in foreign
countries in recent years. Cinrofloxacin and enoxacin are
produced with CPA as raw material and therefore the demand of
CPA is increasing drastically. Major CPA producers in China
include Zhejiang Shaxing Pharmaceutical & Chemical Co., Ltd.
(1.5 thousand t/a), Zhejiang Haixiang Pharmaceutical & Chemical
Co., Ltd., Xinchang Guobang Chemical Industrial Co., Ltd., Xi'an
Kangfu Pharmaceutical Factory, Hangzhou Kaiyuan Sci-Tech
Industrial Co., Ltd., Yangzhou Xingda Chemical Co., Ltd.,
Huainan No.3 Pharmaceutical Factory and Jiangxi Pingxiang
Sanglin Chemical Plant. The consumption of GBL in the CPA
production was 12 thousand tons in 2005 and is expected to reach
around 15.1 thousand tons in 2008.

    (2) NMP
NMP is a high-effect selective solvent. It is mainly used in the
recycle of organic raw materials, the refining of lube oils and
polymerization reactions. Besides, it can also be used to
synthesize fine chemicals such as pharmaceuticals, pigments,
spices and cleaning agents. The consumption of GBL in the NMP
production was around 8 thousand tons in 2005 and is expected
to reach around 9.8 thousand tons in 2008 with an average annual
growth of 7%.

     (3) ABL
ABL is produced from GBL and methyl acetoacetate through
multi-step reactions. It is an important fine chemical
intermediate. The major producer in China is Nantong Cellulose
Acetate Plant. ABL is mainly used to synthesize vitamin B1.
Vitamin B1 is one of the three main vitamins in the world. China
is a large producer and exporter. The output of ABL in China was
around 6.5 thousand tons in 2005, consuming around 4.2 thousand
tons of GBL (the unit consumption being 0.65-0.67 t/t). With the
constant expansion of the domestic market, the demand will
further increase in future. It is expected that the demand of
GBL in the ABL production will reach around 5 300 tons in 2008
with an average annual growth of 8% from 2005 to 2008.

    (4) NVP/PVP
NVP is mainly used to synthesize PVP. PVP is an important polymer
with excellent properties of solubility, film forming,
complexing, surface activity and chemical stability.
Applications are different with different average molecular
weights. It is mainly used in pharmaceutical, food, daily-use
chemical, coatings, polymerization, papermaking, textile
dyeing/printing, photosensitive material and agricultural
sectors. The production and application of PVP in China started
rather late. There are very few producers and the domestic demand
is mainly satisfied by imports. The demand of GBL in the NVP/PVP
production was around 3.2 thousand tons in 2005. It is expected
that the average annual growth of the demand will slow down to
around 7% and the demand will reach 3.9 thousand tons in 2008.

    (5) Alpha-Pyrrolidone
Alpha-Pyrrolidone is mainly used to synthesize polybutyrolactam
(nylon-4). It can also be used in agrochemicals and some
pharmaceuticals. The consumption of GBL in the
alpha-pyrrolidone production was around 1.5 thousand tons in
2005 and is expected to reach 1.8 thousand tons in 2008 with an
average annual growth of around 6%.

    (6) Others
With the development of related sectors, the demand of GBL will
increase constantly. Pharmaceuticals, pesticides, spices,
artificial blood plasma, vitamins and chlorophyll will become
new demand growth points for GBL and the prospect in these
sectors is very promising. The consumption of GBL in other
sectors was around 1.2 thousand tons in 2005 and is expected to
reach 1.5 thousand tons in 2008 with an average annual growth
of around 8%.
   It is expected that the demand of GBL in China will reach
around 37.4 thousand tons in 2008 and the average annual growth
will be 7.5% from 2005 to 2008. The GBL consumption market in
China is developing rapidly, but the capacity has already
reached 50 thousand t/a today, new large GBL units will be
constructed and expansion plans in existing producers will be
executed. There will therefore be an oversupply in the domestic
GBL market in the next few years.

Table 1  Major GBL Producers in China in 2005
  (thousand t/a)
Producer                                           Capacity
Zhejiang Taizhou Liansheng Chemical Industrial Co.    12
Shanxi Sanwei Chemical Industrial Group              10
Anhui Haifeng Fine Chemical Co.                     6
Sinopec Nanjing Jinlong Chemical Plant               5
Jiangsu Taizhou Yanling Fine Chemical Co.             5
Shengli Oilfield Dongsheng Xingrun Chemical Industrial Co.
    4
Northeast Pharmaceutical Factory                    2
Source: CNCIC Chemdata

Table 2  GBL Deman