How far can isobutyraldehyde and neopentyl glycol go up?
Isobutyraldehyde recently domestic prices rose significantly, compared with the beginning of May, the price increase is close to 20%, by which its downstream neopentyl glycol, dodecanol ester and other prices have also risen significantly, on polyester resins, emulsion paints, and other production costs have had a significant impact.
Isobutyraldehyde / Neopentyl glycol / dodecanol ester prices rose sharply
Isobutyraldehyde: the recent domestic isobutyraldehyde market price rose significantly, the current isobutyraldehyde market price of 9850-9900 yuan / tonne, compared with the beginning of May rose 1750 yuan / tonne. Recently, two factories in Jiangsu have been parked for maintenance, and the domestic isobutyraldehyde industry’s work rate has dropped to 70%, and the delay in the conversion plan of the factories in Tianjin area has also increased the loss of isobutyraldehyde supply, and the tightening of the supply side has become the main factor for the price of isobutyraldehyde to rise. From the downstream industry, Neopentyl Glycol support is strong, but the alcohol ester industry conduction resistance, some enterprises recently shut down production, the industry’s work rate fell, for isobutyraldehyde support weakened.
Neopentyl Glycol: Recent neopentyl glycol market prices rose strongly, by isobutyraldehyde supply tightness led to price increases, cost support is strong. Supply side of new pentyl glycol social inventory fell to a low level, the supply side support is strong, new pentyl glycol prices continue to rise, in the cost and supply side of the positive factors, as of now new pentyl glycol up 11,500-11,700 yuan / tonne, the price of the beginning of May rose 1800 yuan / tonne.
Dodecanol ester: Domestic dodecanol ester market is running strong, raw material prices continue to rise, the cost of alcohol ester is under serious pressure, alcohol ester industry starts to decline. At present, the domestic dodecanol ester market price of 12000-12300 yuan / tonne, the price rose 800 yuan / tonne compared with the beginning of May.
At present, the domestic downstream demand for isobutyraldehyde reaches 740,000 tonnes, while the actual supply is only about 500,000 tonnes, isobutyraldehyde gap of about 200,000 tonnes, and the upstream intermittent shutdown maintenance further aggravate the supply gap, although isobutyraldehyde is a by-product of butyloctanol, but the actual but has been in the seller’s market, the upstream head of the enterprise mouth concentration is very high. Even considering the actual production capacity and downstream work rate, isobutyraldehyde supply gap still exists.
Isobutyraldehyde (also known as isobutyraldehyde, isovaleraldehyde) is an organic compound with the chemical formula C4H8O. isobutyraldehyde is a by-product of the butanol production process, belonging to the intermediate raw materials, the butanol plant can be adjusted by a certain degree of “alcohol aldehyde”, moderately cut or increase the output of aldehyde.
The main downstream of Isobutyraldehyde is Neopentyl Glycol and Dodecanol Ester, of which the demand of Neopentyl Glycol accounts for about 60%, and the demand of Dodecanol Ester accounts for about 30%, and the total demand accounts for more than 90%. The price correlation between the two main downstreams of isobutyraldehyde, neopentyl glycol and dodecanol ester and isobutyraldehyde is close to 90%, and isobutyraldehyde directly affects the price fluctuation of its downstream products.
Neopentyl Glycol (NPG), white crystalline solid, odourless, hygroscopic. The main upstream raw materials are isobutanal and formaldehyde, which are mainly used in the production of polyester resins for powder coatings and saturated polyester resins for rolled steel, unsaturated polyester resins, and alkyd resins for chemical products, and also in the production of polyurethane resins, foams, pharmaceutical intermediates and other products. In terms of cost, Isobutyraldehyde accounts for about 70% of the raw material cost of Neopentyl Glycol. Therefore, the price of Isobutyraldehyde becomes the main factor affecting the price of Neopentyl Glycol.
Dodecanol ester is an environmentally friendly green solvent, dodecanol ester has good hydrolytic stability, a strong solvent for latex polymers, high polycondensation, a very ideal film-forming additives. From the dodecanol ester main application direction that is film-forming additives, in water-based architectural coatings, automotive coatings and water-based wood finishes have applications, and in the field of coatings, water-based architectural coatings with film-forming additives accounted for the total consumption of dodecanol ester about 90%, the coating field is the main direction of consumption of dodecanol ester.
The industrial chain has a high rate of refinement, and there are many directions that can be expanded downstream, and the sharp rise of these representative products will have a direct impact on a wide range of products. I see that the products that may be affected are: dodecanol esters, cetyl esters, unsaturated resins, polyester resins, alkyd resins, polyurethane and some pharmaceutical intermediates, incomplete statistics, can be affected by no less than 10 kinds.
At present, the industry is more concerned about the industry chain, which lies more in the study of the possible future upside. For this reason, I have studied the basic situation of the industry chain:
First, neopentyl glycol is a basic chemical raw material product
According to the survey, there are two routes for the preparation of neopentyl glycol, one is the hydrogenation method of isobutyraldehyde and formaldehyde, and the second is the disproportionation method of isobutyraldehyde, liquid alkali and formaldehyde. In the past, the overall domestic production capacity was low and dominated by disproportionation method, with low product quality and competitiveness, and high dependence on imports. As the overall domestic neopentyl glycol production capacity continues to expand, and the production capacity of hydrogenation methods such as Wanhua Chemical and Zhanhua Yukai is gradually coming on stream, the proportion of hydrogenation method continues to rise.
Neopentyl glycol is mainly used in the production of saturated polyester resins, unsaturated polyester resins, polyester polyols, synthetic lubricants, polymer plasticisers and alkyd resins, etc. It is widely used in coatings for automobiles, home appliances, decorative materials and other industries, and its application and development in the field of powder coatings is particularly prominent. The downstream of isobutyraldehyde is mainly used as the raw material for the production of Neopentyl Glycol, and it can also produce Dodecyl Alcohol Ester and by-product Cetearyl Alcohol Ester.
Second, short-term price surge is the main direction of industry concern
I see that the industry chain has been relatively mature, there is no outstanding performance in terms of industrial scale and structure, and it is the recent price fluctuations in the industry chain that have led to a surge in industry concern.
Throughout the past long cycle of price fluctuations, although the recent price has risen sharply, but from the beginning of 2022 to date in the market, the current price after the rise has only reached the level of June 2022, and still did not reach the historical high point of the past three years.
It can be seen from the market so far in 2022, isobutyraldehyde and neopentyl glycol prices have almost maintained the same direction of fluctuation, fluctuation amplitude and trend is basically the same. And through the goodness-of-fit calculation, using the two sets of data of more than 620 points in history, the fit of the two is more than 92%, which belongs to the strong correlation relationship.
Isobutyraldehyde and Neopentyl Glycol price fluctuations are strongly correlated and affect each other. Based on the historical 3-year trend, it is roughly seen that the price of Isobutyraldehyde fluctuates relatively earlier than that of Neopentyl Glycol, so it is roughly assumed that the price of Neopentyl Glycol follows the fluctuation of the price of Isobutyraldehyde in many cases.
Thirdly, what caused the short-term surge in isobutyraldehyde and neopentyl glycol prices?
According to my analysis, there are three reasons for this round of price surge:
1, isobutyraldehyde enterprises focused on maintenance, the market supply side is reduced, the market speculation price rise. From April, Tianjin Bohai, Anqing Shuguang, Zibo Novo have turned to alcohol, the market supply side in April about 275 tonnes / day less, and the turnover plan lasts a long time, for the market in the isobutyraldehyde speculation lay the groundwork.
The main reason for many enterprises to switch to isobutanol production is that isobutyraldehyde in April 2024 profitability significantly decreased. According to my statistical data show that the theoretical profit margin of isobutyraldehyde in April 2024 in 1300 yuan / tonne, is in the past 10 months at the lowest level, although the production is profitable but not as profitable as isobutanol, so the relevant enterprises have to switch to production.
2、Neopentyl alcohol has a low profit margin in the early stage, leading to enterprises have chosen to stop production or reduce the start rate. According to my statistics show that in April 2024, neopentyl glycol has 4 enterprises parking production, the market supply side in April about 500 tonnes / day, the market formed a larger speculative benefit. The main reason for the stoppages lies in the fact that the production of neopentyl glycol is in a loss-making situation.
According to my theoretical profit margin measurement of Neopentyl Glycol, it is difficult to have a profitable situation in the past 30 months, and the theoretical profit in April 2024 is a loss of RMB 2,000 per tonne. Neopentyl glycol as downstream alkyd resins, polyester resins and other applications in the field, the product competition is exceptionally fierce, many companies are lowering prices to grab the market, supporting industry chain integration of enterprises, a slight advantage in this competition, but more companies are in a loss-making situation.
3. The record-breaking market of trimellitic anhydride this year may also drive up the price of isobutyraldehyde and neopentyl glycol. In my opinion, the sharp rise of trimellitic anhydride may be one of the core factors driving up the price of isobutyraldehyde and neopentyl glycol. Trimellitic anhydride is a secondary raw material for polyester resin, and 1 tonne of polyester resin requires 0.019,267 tonnes of trimellitic anhydride, and 0.150 tonnes of neopentyl glycol. Although it accounts for a very small proportion, trimellitic anhydride has seen a record-breaking market this year, with a cumulative rise of 220% in the past month, leading to a series of chain reactions.
At present, China’s trimellitic anhydride prices are still hovering at a high level, and the reason for the lack of rise is the resistance of the downstream, including polyester resin enterprises. At the same time, downstream enterprises have also been raised, mainly driven by rising raw material prices, trimellitic anhydride has become one of the main reasons for price increases in the downstream consumer market, thus triggering the butterfly effect.
Fourth, how much room is left for this round of rise?
As of mid-June 2024, China’s neopentyl glycol and isobutyraldehyde prices are hovering at a high level, and enterprises are mostly negotiating in detail for actual orders. It can be seen that there is no obvious impetus for price increase. In addition, this round of price increase has led to a significant increase in the theoretical profitability of isobutyraldehyde, with the theoretical profitability exceeding RMB 5,000 per tonne in June 2024, but due to the smaller increase in neopentyl glycol, it has led to the current state of still being in theoretical loss.
Moreover, due to the sharp rise in the price of isobutyraldehyde this round, resulting in many enterprises have to switch to production, the market supply side has increased significantly, but also to a certain extent inhibit the price of further sharp rise. In addition, the strength of trimellitic anhydride has gradually faded, the chain reaction of the industry chain is also gradually revealed, the market wait-and-see mood gradually warmed up. In my opinion, Isobutyraldehyde and Neopentyl Glycol will be hovering at a high level in the short term, and we can’t rule out the possibility that there is still room for further increase, especially for Neopentyl Glycol. But in the long run, no effective favourable support for continuous price increase, the market still needs to be sober, and it is recommended that the relevant enterprises pay close attention to it.
Neopentyl glycol is the raw material of neopentyl glycol diacrylate CAS 2223-82-7