1,4-Butanediol (BDO) is an important organic and fine chemical raw material, widely used in textile and chemical industries. In recent years, with the continuous expansion of applications in emerging fields such as biodegradable plastics and lithium batteries, and the recovery of traditional downstream industries such as spandex and PBT plastics, the demand for BDO has been significantly boosted.

　　According to Steelhome data, the BDO market is currently exceptionally hot, with Prices rising. The benchmark Price for BDO in the East China market has exceeded the 11000-11100 yuan/ton mark, with increases over the past week. According to research by Shenwan Hongyuan Securities, China's annual apparent consumption of BDO is expected to reach approximately 4.47 million tons by 2025, with a compound growth rate of 26.5% in BDO demand from 2020 to 2025.

　　The traditional Applications of BDO are mainly spandex and PBT engineering plastics. Among them, the spandex industry chain and PBT engineering plastics account for 51% and 26% respectively in the downstream Applications of BDO. With the recovery of textile and apparel demand and the increase in export orders, the spandex market is exceptionally hot, with product Prices increasing by nearly 200%. The PBT plastics industry also shows a clear upward trend, with increasing Applications in new energy vehicles and charging equipment.

　　In addition to traditional Applications, the Applications of BDO in emerging fields such as biodegradable plastics and lithium batteries are also rapidly expanding. With the intensive introduction of plastic restriction policies in China, the demand for biodegradable plastics is about to Enter an explosive period. PBAT is expected to take the lead in increasing production in the biodegradable plastics market for agricultural plastic films and packaging materials due to its mature production technology and high cost-effectiveness. As a major raw material for PBAT, BDO is expected to generate an additional 2.5 million tons/year of demand by 2025. At the same time, BDO is also an indispensable raw material in the currently hottest lithium battery industry chain. Its downstream NMP is an important solvent in the production process of lithium battery cathodes and can also be used as a cleaning agent for semiconductors and integrated circuits.

　　Due to the long-term low Prices of BDO products, companies can only barely maintain break-even, and the low prosperity of the industry has also severely suppressed new capital expenditure. Currently, the annual output of BDO in China is approximately 1.45 million tons, with a demand gap of more than 200,000 tons. Only two companies in the A-share market, Zhongtai Chemical and Shaanxi Black Cat, have BDO production capacity, with a combined annual capacity of only 330,000 tons. The huge supply-demand gap has attracted many domestic companies to frequently expand production. Currently, the planned new BDO production capacity in China exceeds 1.5 million tons, but the construction process of BDO production capacity usually takes about two years, and a certain commissioning period is required after completion to achieve stable production. The new production capacity will not gradually Enter the production capacity release period until the second half of 2022 at the earliest. Many industry insiders believe that the mismatch between new production capacity and downstream demand growth will cause this round of BDO shortage cycle to last for more than two years, and the prosperity of BDO will therefore continue to rise.

　　Recently, the world's largest BDO project with an annual output of 900,000 tons has been located in Fujian. This project uses a large amount of by-product hydrogen generated from propane dehydrogenation to produce BDO, a new chemical material, which can be used to produce lithium batteries, high-end spandex fabrics, and fully biodegradable plastics, helping to promote the development of China's new energy and environmental protection industries. This move has an important promoting effect on China's plastics and chemical industry, helping to promote the transformation and upgrading of China's chemical industry and the development of new energy and environmental protection industries. (Source: First Chemical Network)