BDO: Market cooling highlights remain

　　In the first half of the year, the domestic 1,4-butanediol (BDO) market cooled down, with twists and turns in the first quarter, and continued downturn in the second quarter
.
By the end of June, the price of BDO had fallen below 20,000 yuan (ton price, the same below), down 11,000 yuan from the price at the beginning of the year, a drop of about 36%, ranking the forefront of the list of decliners
.

　　Compared with the same period last year, the BDO market in the first half of this year was much inferior, but compared with the price of around 10,000 yuan before 2021, the current market is still in a bright moment
.

　　The domestic BDO market trend in the first half of the year (unit: yuan/ton)

　　Longzhong Information analyst Wu Lili: profit margins are still considerable

　　Entering 2022, the BDO market is at its peak at the beginning, and the price center of gravity has fallen sharply since then, with a drop of 18.
03%
.
Subsequently, the BDO market bottomed out, and the disk continued to rise.
The mainstream price of bulk water rose from 25,000 yuan to 28,500 yuan, an increase of 14%
.
In late March, the BDO market started to decline
.
Even so, the BDO market remained high in the first quarter, with the overall price around 27,100 yuan
.
The average price of BDO in the second quarter was 23,200 yuan, which continued to decline.
The decline was not curbed until late May
.
In the first ten days of June, the BDO market rose slightly, but the price only rose by about 100 yuan, and then the decline accelerated, and the price fell to 19,500 yuan at the end of the month
.

　　It can be seen from the market trend in the first half of the year that the supply and demand side is still an important factor restricting the BDO market
.
In March, the BDO market rebounded sharply due to the replacement of catalysts or unexpected shutdowns of production units, while the operating rate of downstream polytetrahydrofuran (PTMEG)-spandex enterprises rose to a high level again with the recovery of terminal demand, resulting in tight BDO spot supply and prices.
soared
.
In the second quarter, affected by the spread of the epidemic, the terminal demand was suppressed, and the negative factors were transmitted upwards, causing the BDO market price to continue to decline
.
Beginning in mid-May, many factories overhauled or replaced catalysts, and the supply side was still supported, but the market did not usher in a sharp rise.
Instead, the price of BDO began to decline sharply due to weak downstream demand and high inventory
.

　　Although the price of BDO fell below 20,000 yuan, the profit was still considerable
.
Taking the acetylenic aldehyde process as an example, in the first quarter, the gross profit of BDO per ton of domestic products fluctuated at a high level of 15,000 to 16,000 yuan, and the average profit was about 16,200 yuan
.
Compared with the first quarter, although the profit margin of BDO has narrowed in the second quarter, the profit per ton of acetylenic aldehyde method still fluctuates between 11,200 and 14,500 yuan
.
Although the profit per ton of maleic anhydride method has fallen below 10,000 yuan, the overall profit is still above 8,000 yuan
.

　　From the perspective of the second half of the year, the BDO operating at a high level has a low correlation with the raw materials calcium carbide and maleic anhydride.
The important factor affecting the BDO market trend is still the supply and demand side
.
In the second half of the year, the new production capacity of BDO will still be released, while the downstream social inventory needs to be consumed
.
Although the "Golden Nine Silver Ten" BDO market may have an upward performance, most of the profits of the industry chain are concentrated on the BDO side, so there is still room for profit downstream.
It is expected that the BDO market will gradually move closer to rationality in the later stage
.

　　Wang Chunming, general manager of Shandong Ruiyang Chemical Co.
, Ltd.
: the release of production capacity puts pressure on the market

　　In recent years, China's BDO production capacity has grown substantially
.
Before 2020, the annual output of BDO in China is basically maintained at around 1 million tons; in 2020, the output will reach 1.
169 million tons; in 2021, the production capacity will increase to about 2.
3 million tons
.

　　In the second half of the year, BDO's new production capacity will be released significantly
.
Dongyuan's 200,000-ton/year plant will be put into operation soon; Meike's 100,000-ton/year plant will be handed over on August 30, and the product is expected to be released in October; Huaheng's 100,000-ton/year plant has been completed and is currently coordinating to solve the water problem; Wanhua's 100,000-ton/year plant in Meishan has also been basically completed, and it is planned to be completed and put into operation on September 30; Ningxia Wuheng Chemical's 116,000-ton/year plant is expected to start operation in August
.

　　Although there may be a delay in the production plan of the plant, it is conservatively expected that more than 300,000 tons of new production capacity will be released in the second half of the year, and the tight supply and demand of BDO may improve
.
Under the influence of this basic core factor, it is expected that the long-term BDO price will return to a reasonable range
.
In addition, the situation that BDO is the dominant company in the industry chain will be improved, making it inevitable to benefit the downstream
.

　　Jinlianchuang analyst Duan Huihui: sluggish demand continues to be cold

　　BDO is mainly used in the manufacture of tetrahydrofuran (THF), PTMEG, γ-butyrolactone (GBL), N-methylpyrrolidone (NMP),
etc.

　　From the current point of view, the application field of BDO is mainly spandex industry
.
The main reason for the surge in BDO prices in the past two years is that the demand for spandex has increased significantly under the epidemic prevention and control
.
At present, the demand for spandex is not as hot as before, and the production capacity is expected to increase in the future, but the increase will not be too large
.

　　The spandex industry is subject to the terminal non-rigid clothing industry, and the inventory has been high.
Under the dual pressure of cost and sales, the market is cautious in purchasing, and the negative factors are transmitted upward, which makes some PTMEG devices maintain low-load operation or even shut down for maintenance
.

　　In addition to the traditional demand for spandex, the two major growth points of BDO's future demand are the fields of new energy vehicles and degradable plastics
.
However, the degradable plastic butylene adipate-butylene terephthalate copolymer (PBAT) industry, which has attracted much attention, has not experienced the expected large increase in production capacity
.
The main reason is that the terminal acceptability is not strong, and the raw materials are at a high level as a whole
.
In order to ease the cost and sales pressure, the load of PBAT's existing equipment has dropped to around 10% of the current level, and the new equipment has been put into production again and again.
Therefore, it is unlikely that the production capacity will be released significantly in the second half of the year
.

　　Although the operating rate of the polyurethane industry has increased under the support of new orders, it has little effect on the raw material market due to the limited consumption of BDO; there has been no sign of improvement in the terminal demand of the GBL-NMP industry
.
The overall operating rate of the downstream is low, and the support of the BDO demand side is weak
.

　　Overall, the downstream demand for BDO is lower than expected
.
Although the current demand shows signs of recovery, it is not ruled out that the "Golden Nine Silver Ten" will have a wave of higher prices, but it will still fade a lot compared to previous years, and it is difficult to strengthen the lifting effect of raw material BDO
.