By Zhao Jun, member of the soft science expert base of the National Energy Administration
Butyl octanol is an important raw material for the synthesis of fine chemical products, and its main downstream products include butyl acrylate, n-butyl acetate, dioctyl phthalate (DOP), dioctyl terephthalate (DOTP) and dibutyl phthalate (DBP). It is mainly used in the production of plasticizers, solvents, dehydrating agents, defoamers, dispersants, flotation agents, petroleum additives, synthetic fragrances, etc.
Intensified competition may continue amid overcapacity
At the end of the 20th century, China started a hot trend of oxo alcohol industry. The former Beijing Chemical Fourth Plant imported from Japan Mitsubishi Chemical Corporation and built a 70 000 t/a low-pressure liquid-phase circulation rhodium process unit. Thereafter, Qilu Petrochemical Co., Ltd., Jilin Petrochemical Co., Ltd., Daqing Petrochemical Co., Ltd., and BASF-YPC Co., Ltd. were put into production one after another. In 2008, the production capacity of China's oxo alcohol stepped into the top three worldwide. In 2010, China's butyl octanol production capacity ranked first worldwide with the production of Lihuayi Group Co., Ltd., Tianjin Bohua Chemical Industry Group Co., Ltd., and Shandong Jianlan Chemical Co., Ltd. In 2013, the production capacity of butyl octanol increased by more than 1 million tons as Luxi Chemical Group Co., Ltd., Shandong Hualu-Hengsheng Chemical Co., Ltd., Shandong Yankuang Energy Group Co., Ltd., Shandong Dongming Petrochemical Group Co., Ltd., Nanjing Wison Engineering Ltd. and other units were put into operation one after another, and the butyl octanol units of domestic local enterprises had mushroomed. The launch of new units in China has not stopped yet. In 2016, Anqing Shuguang Chemical Group Co., Ltd. had 250 000 t/a of butyl octanol put into operation. In 2017, Luxi Chemical Group Co., Ltd. continuously expanded its capacity. In 2018, CNOOC and Shell Petrochemical Co., Ltd., Huachang, and Yan'an Energy and Chemical Group Co., Ltd. had new units put into production one after another, all of which push the total production capacity of China's butyl octanol up to 5 million t/a. At present, the production capacity of China's butyl octanol (butanol 2.8 million t/a, octanol 2.5 million t/a) accounts for 1/3 of the world's total.
The main downstream of butanol includes butyl acrylate, n-butyl acetate and DBP, and the main downstream of octanol includes DOTP, DOP and octyl acrylate. In 2022, the demand for n-butyl alcohol in China began to weaken, mainly due to the declined operating rate of butyl acrylate in the downstream. The consumption of butanol was about 2.1 million tons, while the production capacity was 2.8 million t/a so the contradiction between supply and demand began to appear, and the export volume began to increase. With the increase of new production capacity, the competition will be intensified in 2023. In terms of octanol, downstream demand was also relatively weak, but the export volume in 2022 exceeded the highest amount over the past five years, reaching 70 000 tons. Even though China's production capacity continues to increase, it still needs to import some low-cost products to meet local demand from Middle East, the United States, and Indonesia, because China's butyl octanol units are less cost competitiveness compared with these import of origins.
Market prices fall to near two-year lows
The butyl octanol price changes frequently, and the market fluctuates greatly. Especially in the third quarter of 2022, the market experienced a wide decline, hitting a number of market new lows. The market price of n-butyl alcohol fell to a low level over the past two years, and the market price in Shandong was RMB6 450 per ton, octanol fell to RMB8 000 per ton. The main reason for the cliff-like decline in the market is due to weak terminal demand, with no significant improvement in downstream and terminal demand. In the long run, China's butyl octanol market will fluctuate and decline.
However, the production of China's butyl octanol is still in the boom and has not stopped yet. In December 2022, Guangxi Huayi Energy and Chemical Co., Ltd.'s 300 000 t/a n-butyl alcohol unit was put into operation; in April 2023, Ningbo Juhua Chemical & Science Co., Ltd.'s 90 000 t/a n-butyl alcohol unit was put into operation; in the same month, Ningxia Baichuan’ s butyl octanol unit was put into operation. In addition, there are still many companies making the feasibility research and planning, but the demand is difficult to undertake these successive production capacity.
At present, the domestic n-butyl alcohol has an overcapacity of 50%. The octanol market, limited by DOP consumption, has a bleak development prospect so the production enterprises may have increasing possibility of reshuffle, and it is not recommended to build new units. With the continuous increase of production capacity and relatively weak downstream demand, the operating rate of China's butyl octanol units will continue to decline, and the product prices will decline too, leaving profit margins further compressed.
