Understanding methyl methacrylate from a production process perspective

In my opinion, value analysis is an important method to analyse the market, which can quickly understand the logic of value transmission in the industrial chain, and predict the direction of cost transmission according to the logic of transmission, so as to predict the market trend of commodities. Among them, the study of cost becomes an important part of the value analysis of the industry chain.

Therefore, I will continue to analyse the value of the chemical industry chain, and I hope that through this kind of analysis, we can make the industry run more healthily and the value distribution more reasonable.

MMA, known as methyl methacrylate, is an important raw material for the production of polymethylmethacrylate (PMMA), which is also commonly known as acrylic.The reason why MMA has been widely noticed by the industry is because of the high-performance material properties of downstream PMMA.

I found that, with the rapid development of China’s new materials industry, downstream optical, electronic, automotive applications of new materials have received a higher degree of attention, but also in recent years there has been a booming trend. One of the downstream PMMA applications in the optical field in the characteristics of its PMMA attention in a substantial increase. PMMA can be used in liquid crystal display materials, automotive instrumentation and lighting materials, architectural decoration materials, advertising light box materials and so on.

It can also be said that it is because of the development of the industry of PMMA, pushing back the development of the MMA industry chain. According to the survey, there are three mainstream production processes of MMA, namely acetone cyanohydrin method (ACH method), ethylene carbonylation method, isobutylene oxidation method (C4 method), and at present, China’s producers are mainly ACH and C4 method, and there is no industrial production unit for ethylene carbonylation method.

Acetone cyanohydrin method is the earliest industrialised MMA production process, which takes hydrocyanic acid, a by-product of acrylonitrile, as raw material, and generates acetone cyanohydrin under the action of alkaline catalyst (diethylamine), and the generated acetone cyanohydrin reacts with sulphuric acid to generate methacrylamide sulphate, and then hydrolysed and then esterified with methanol to generate crude MMA and acidic aqueous mixture. The crude MMA is distilled to produce MMA products, the unreacted methanol is recovered and recycled, and the residual liquid after the reaction enters the recovery section to recover ammonium bisulfate. In other words, ACH method is a production process using acetone and hydrocyanic acid as raw materials.

The isobutylene method is referred to as C4 method, firstly oxidize isobutylene to make methacrolein, then oxidize it to make methacrylic acid, and finally esterify it with methanol to generate MMA.At present, the domestic C4 routes are all three-steps, 1, isobutylene/tert-butyl alcohol in the function of Mo-Bi catalyst and air gas-phase oxidation reaction to generate MA, the conversion rate of isobutylene is more than 95%, and the selectivity of MA (mole fraction) is more than 80%; 2, MA selectivity is more than 80%; 2, the reaction of MA is more than 80%; 2, the reaction of MA is more than 80%. The MA oxidation reaction adopts phosphomolybdenum catalyst, and alkali metals are added to increase the thermal stability, regulate the activity and increase the surface area of the catalyst, and the conversion rate of MA can reach 98% after multi-stage oxidation reaction; 3. The esterification of MAA generates MMA, and the esterification reaction of MAA can be either a liquid-phase reaction or a gas-phase reaction. In other words, the C4 method is based on isobutylene as the main raw material.

The ethylene carbonylation method, also known as the BASF method, consists of the following processes: carbonyl synthesis, hydroxyl aldehyde reaction, oxidation reaction and esterification reaction. Firstly, ethylene is carbonylated with carbon dioxide and hydrogen to generate propionaldehyde, then propionaldehyde is condensed with formaldehyde under the condition of acetic acid and dimethylamine catalysis to generate MAL and water, and MAL is oxidised to generate MAAMAA After cooling, it is reacted with methanol under the catalytic condition to generate MMA Crude MMA has a total yield of about 90%. In other words, the main raw material of ethylene carbonylation method is ethylene.

Therefore, our study of MMA value chain should follow the latitude of the following industry chains, which are ACH method production value chain, C4 method production value chain, PMMA method production value chain and ethylene carbonylation method production value chain.

 

Industry chain I: ACH method MMA value chain

In the production process of MMA by ACH method, the main raw materials are acetone and hydrocyanic acid, of which hydrocyanic acid is produced through the by-production of acrylonitrile, and there are also auxiliary materials, methanol, so the industry generally uses acetone, acrylonitrile and methanol as the cost of calculating the composition of raw materials. The unit consumption of 0.69 tonnes of acetone and 0,32 tonnes of acrylonitrile as well as 0.35 tonnes of methanol is calculated, in the cost composition of MMA by ACH method, the cost of acetone accounts for the largest proportion, followed by hydrocyanic acid produced by by-product of acrylonitrile, and methanol accounts for the smallest proportion.

According to the price correlation test of acetone, methanol and acrylonitrile in the past three years, it is found that the correlation of ACH MMA with acetone is about 19%, the correlation with methanol is about 57%, and the correlation according to acrylonitrile is about 18%. It can be seen that this is a gap with the cost share in MMA, in which the high share of acetone for the cost of MMA, can not be reflected in the price fluctuations of its price fluctuations on the price of ACH method of MMA, while the price fluctuations of methanol, the price of MMA have an impact on the price of MMA, which is greater than that of acetone.

However, the cost share of methanol is only around 7%, and the cost share of acetone is around 26%. For the value chain study of MMA, it is more important to look at the cost changes of acetone.

For the cost composition of acetone, the main raw materials are pure benzene, propylene, of which pure benzene in the variable cost composition of acetone accounted for the largest proportion of propylene in the second place, so for the cost fluctuations of acetone, mainly from the price fluctuations of pure benzene. However, as acetone is co-produced by phenol and ketone plant, the impact of acetone cost depends more on the integrated cost composition of phenol and phenol ketone plant.

To summarise, the value chain of ACH MMA mainly comes from the cost fluctuations of acetone and methanol, with acetone having the greatest impact on the value of MMA. The value chain of acetone refers more to the cost changes of pure benzene, propylene and phenol and ketone integration projects.

Industry chain II: C4 method MMA value chain

For the value chain of C4 MMA, the raw materials are isobutylene and methanol, of which isobutylene is a high-purity isobutylene product, which comes from MTBE cracking production. Methanol is an industrialised methanol product, which comes from coal production.

According to the cost composition of C4 MMA, the variable costs are 0.82 for isobutylene and 0.35 for methanol. With the progress of production technology, the industry has already reduced the unit consumption to 0.8, which reduces the cost of C4 MMA to a certain extent. The rest are fixed costs, such as water, electricity and gas costs, financial costs, sewage treatment costs and others.

In this, the share of high-purity isobutylene in the cost of MMA is about 58%, and the share of methanol in the cost of MMA is about 6%. It can be seen that isobutylene is the largest variable cost in C4 MMA, in which the price fluctuation of isobutylene has a huge impact on the cost of C4 MMA.

The impact on the value chain of high-purity isobutylene can be traced back to the price fluctuations of MTBE, which consumes 1.57 units and constitutes more than 80% of the cost of high-purity isobutylene. The cost of MTBE comes from methanol and pre-ether C4, of which the composition of pre-ether C4 can be linked to the value chain of raw materials.

In addition, it should be noted that, at present, high-purity isobutylene can be produced by dehydration of tert-butanol, and some enterprises will adopt tert-butanol as the basis for MMA cost calculation, and the unit consumption of tert-butanol is 1.52. According to the calculation of tert-butanol of 6,200 yuan/tonne, tert-butanol accounts for about 70% of the proportion of the cost of MMA, which is larger than that of isobutylene.

That is to say, if tert-butanol price linkage is adopted, the fluctuation of the value chain of C4 MMA, the influence of tert-butanol is more important than that of isobutene.

To sum up, in C4 MMA, the influence weight on the value fluctuation is ranked from high to low: tert-butanol, isobutene, MTBE, methanol, crude oil.

Chain 3: Ethylene carbonylation MMA value chain

There is no industrial production of ethylene carbonylation MMA in China, so it is impossible to speculate the impact of value fluctuation through actual industrial production. However, based on the unit consumption of ethylene in ethylene carbonylation, ethylene is the main cost impact for this process of MMA with a cost composition of more than 85%.

The transmission logic for the value of ethylene can be divided into the naphtha cracking chain and the coal chain. Naphtha cracking to produce ethylene cost calculation, due to the characteristics of the cracking device multi-product, the current calculation method and formula is not uniform, in which naphtha for the cost of ethylene accounted for the largest proportion.

And coal to ethylene cost composition, coal for coal to ethylene cost accounted for more than 85%, is the largest cost composition. However, as ethylene is a key indicator of the level of China’s chemical industry, the pricing of ethylene comes more from the fluctuation of foreign prices, that is, the fluctuation of crude oil prices. Therefore, the cost of China’s coal-based ethylene, although coal accounts for the largest proportion of the cost of ethylene, but more reference to the development of oil prices.

Industry Chain 4: PMMA Value Chain

PMMA, as the main downstream product of MMA, can be used in liquid crystal display materials, building installation materials, advertising industry, daily necessities industry, etc., which has a wide range of applications. In addition, the downstream of MMA can also produce resin, emulsion, ACR and other fields. Among them, the downstream as the production of PMMA, the annual consumption of MMA accounts for more than 70%.
Figure 2 China PMMA industry chain flow chart

I look at the composition of the value chain according to PMMA, in which the consumption of MMA unit consumption is 0.93, MMA according to the calculation of 13,400 yuan / tonne, PMMA according to the calculation of 15,800 yuan / tonne, MMA in the variable cost of PMMA accounted for about 79%, which is relatively high.

That is to say, the price fluctuation of MMA has a greater impact on the value fluctuation of PMMA, which is a strong correlation effect. According to the correlation between the two price fluctuations in the past three years, the correlation between the two is more than 82%, which is a strong correlation effect. Therefore, the price fluctuation of MMA will cause the price of PMMA to fluctuate in the same direction with high probability.

Finally, I would like to say, due to the ACH method of MMA there is hydrocyanic acid involved, for the corrosive nature of the equipment and the threshold of entry are relatively high, leading to the future MMA project put into operation, most of them are concentrated in the C4 method of production process. Therefore, the supply of C4 MMA will be more and more, and the cost of C4 method is more from the tert-butanol, isobutylene and methanol. Therefore, the research on the value chain of MMA should be more focused on the fluctuation level of variable raw material cost of C4 method.

Which MMA (methyl methacrylate) production process is the most competitive?

I have seen that different production processes have led to a wide range of production costs for the same chemical, and have created different competitive landscapes. Currently there are nearly six production processes for MMA in the Chinese market, and all six have been industrialised. In the Chinese market, the competition status of different processes of MMA is very different. According to the survey, there are several mainstream production processes for MMA, namely acetone cyanohydrin method (ACH method), ethylene carbonylation method, isobutylene oxidation method (C4 method), relying on these three production processes, and derived from the improved ACH method, glacial acetic acid method, as well as the BASF method and Lucite method, which are mainly representative of the process of the company’s name, and at present, all these six production processes have been realised in China with 10,000 tonnes and above. All six production processes have been put into production in China with a capacity of 10,000 tonnes or more. It should be noted that in September 2022, a 10,000-tonne coal-based methanol-acetic acid to methyl methacrylate (MMA) project industrial demonstration plant independently researched and developed by the Institute of Process Engineering of the Chinese Academy of Sciences (IPE, CAS) was successfully started up and operated stably, and the product was qualified and met the standards. This unit is the world’s first coal-based methanol-acetic acid to MMA industrial demonstration unit, realising the transformation of domestic methyl methacrylate production from relying entirely on petroleum feedstock to using coal-based feedstock.

 

I observed that the shift in the competitive landscape has also led to a shift in the supply and demand environment for MMA products, which has dampened the strong price development. Based on the price trend over the past 2 years, the market price of MMA in China has shown narrow fluctuations, with the highest price at RMB 14,014 per tonne and the lowest price at around RMB 10,000 per tonne. As of August 2023, the China MMA market price was at RMB 11,500/tonne. Figure 1 China MMA benchmark price chart Data source: Business News Agency The main representative product of MMA downstream is PMMA, and most of the enterprises rely on the development of MMA-PMMA industry chain mode.The market price of PMMA has shown a weak oscillation in the past 2 years, with the highest price at RMB 17,560/tonne and the lowest price at RMB 14,625/tonne. As of August 2023, the mainstream price of PMMA market in China fluctuated at RMB 14,600/tonne. It should be noted that, as domestic PMMA products are mostly dominated by low-end grades, the price level of the products is lower than that of the imported market. Figure 2 China PMMA apparent price trend (unit: yuan / tonne) Data source: business community is currently recognised in the industry is that different MMA production process determines the competitiveness of the MMA-PMMA industry chain.

 

I measured the cost of MMA under different processes in the past and present according to different processes, and got the following conclusions:
Firstly, the ethylene-based MMA production process has been the most competitive in the past 2 years without considering the acetic acid-based MMA units. According to my statistical data, from 2020 to August 2023, in the comparison of MMA production costs of different processes in China, ethylene method MMA has the lowest cost and the strongest competitiveness. Among them, the theoretical cost of ethylene method MMA in 2020 is 5,530 yuan/tonne, and the average cost from January to July 2023 is only 6,088 yuan/tonne. And the highest cost production process is the BASF method, the cost of MMA of this method in 2020 is at RMB 10,765/tonne, and the average cost in January-August 2023 also reaches RMB 11,081/tonne. It should be noted that the basic raw material unit consumption of ethylene method according to: ethylene 0.35, methanol 0.84, syngas 0.38. which ethylene using Sinopec ethylene settlement settlement, syngas according to the 900 yuan / tonne measurement. The essence of BASF method is also ethylene method, in which ethylene unit consumption is 0.429, methanol unit consumption is 0.387, syngas unit consumption is 662 cubic metres. The difference in ethylene and methanol unit consumption, as well as the difference in catalysts and utilities therein, has resulted in the latest ethylene method being the most competitive over the past few years. Based on the cost measurement of different processes in the past few years, the ranking of MMA competitiveness of different processes is as follows: Ethylene > C4 > Improved ACH > ACH > Lucite > BASF. Due to the large difference of public works in different processes, it is obtained according to the unified public works measurement.

 

Second, acetic acid method MMA is expected to become the most competitive production method. 2022 September, the Chinese Academy of Sciences Institute of Process Engineering independent research and development of 10,000 tonnes of coal-based methanol – acetic acid methyl methacrylate (MMA) project industrial demonstration device in Xinjiang Hami successful drive, for the world’s first set of coal-based methanol – acetic acid MMA industrial demonstration device. Methanol and acetic acid are used as raw materials, and MMA products are obtained through hydroxyl aldehyde condensation and hydrogenation. According to the Chinese Academy of Sciences (CAS), a uniformly loaded hydroxyl aldehyde condensation multi-stage pore catalyst and a large-scale preparation technology have been developed, which breakthroughs through the problems of low selectivity and short life of the catalyst. Moreover, key technologies such as simulated moving bed reaction-regeneration have been overcome, achieving the stable operation of hydroxyl aldehyde condensation reaction for a long period of time. A new type of extraction and separation technology has been developed to solve the separation problem of complex azeotropic systems such as formaldehyde-MMA-water. After the introduction of Chinese Academy of Sciences, the economic superiority of this method of MMA process is obvious, the process is clean and green, and this route realises the transformation of domestic MMA production from complete dependence on petroleum raw materials to coal-based raw materials. In my opinion, the production process has obvious advancement, and the process is shorter, the raw material is produced from coal, and it is predicted to have more obvious cost advantage. In addition, a large-scale industrial plant of 110,000 tonnes/year is being planned, which will bring upgraded development to China’s MMA industry.

Thirdly, there are obvious differences in the cost impact weights of different processes. around 18%. The cost share of methanol is only around 7% and the cost share of acetone is around 26%. For the value chain study of MMA, it is more important to look at the cost changes of acetone.C4 MMA cost impact weighting analysis: the proportion of high purity isobutene in MMA cost is about 58%, and the proportion of methanol in MMA cost is about 6%.In C4 MMA, isobutene is the largest variable cost, in which the price fluctuation of isobutene has a great impact on the cost of C4 MMA. Analysis of the weight of the cost impact of ethylene MMA: According to the ethylene unit consumption in ethylene carbonylation, ethylene is the main cost impact for the MMA cost composition of this process of more than 85%. However, it should be noted that most of the ethylene is self-produced supporting production, and the internal settlement mostly adopts cost price settlement, so the theoretical competitiveness level of ethylene is not as good as the actual competitiveness level.

Fourth, which MMA production process will be the lowest cost in the future? In my opinion, under the premise of the current state of the art, the fluctuation of raw material prices will become a key element in the future competitiveness level of MMA of different processes. The main raw materials in these production processes are MTBE, methanol, acetone, sulphuric acid and ethylene, which can be purchased externally or supplied internally, while synthesis gas, catalyst and auxiliary materials, hydrocyanic acid, crude hydrogen, etc., are self-supplied by default and with unchanged prices. the downstream of MTBE is based on the blending of oil products, and its prices follow the trend fluctuations of the refined oil products market, which in turn follow the close fluctuations of the crude oil price. Under the premise of bullish oil price expectation in the future, MTBE price will also show the possibility of rising, and the rising trend is expected to be stronger than crude oil. Methanol market follows the trend fluctuations in coal prices, the future supply is expected to continue to grow significantly, but more industrial chain mode development, downstream self-use rate is expected to continue to increase, is expected to speculate on the commodity methanol market prices continue to show a rising trend. Acetone market supply and demand environment deteriorated, and the ACH method of new projects is blocked, long-term price fluctuations are relatively weak. Ethylene is mostly self-supplied internally, with strong price competitiveness. After comprehensive assessment, I think the competitiveness of different processes of MMA in China in the future, among which ethylene method is expected to continue to be strong, followed by ACH method, especially ACH method supporting acrylonitrile plant, and the other is C4 method and so on. However, it should be especially noted that the future development of enterprises in industry chain mode, low cost of by-products and downstream supporting PMMA or other chemicals mode will be the most competitive operation of the MMA industry chain.

Time is running out for energy-intensive chemical companies to transform their technologies?

According to my understanding, just on 4 July 2023, the National Development and Reform Commission and other departments issued a notice on the release of the “Energy Efficiency Benchmark Levels and Benchmark Levels in Key Areas of Industry (2023 Edition)”, which further clarified the oil refining, coal coke, coal methanol, coal olefin, coal ethylene glycol, caustic soda ash, soda ash, calcium carbide, ethylene, paraxylene, yellow phosphorus, synthetic ammonia, monoammonium phosphate, diammonium phosphate Benchmarking and benchmarking energy efficiency levels, and added ethylene glycol, urea, titanium dioxide, polyvinyl chloride, purified terephthalic acid, radial tyres in benchmarking and benchmarking energy efficiency levels.
From the NDRC released the 2023 version of the energy efficiency level requirements, for further clarification of the chemical industry, in principle, should be completed by the end of 2025 technical transformation or phase-out; and for the new chemical industry, in principle, should be completed by the end of 2026 technical transformation or phase-out. That is to say, as of the date of publication, the real time left for the technological transformation of chemical enterprises is 2-3 years.

In my opinion, the Energy Efficiency Benchmarking Levels and Benchmarking Levels for Key Areas of Industry (2023 Edition) is a reiteration of the content following the Energy Efficiency Benchmarking Levels and Benchmarking Levels for Key Areas of High Energy-Consuming Industries (2021 Edition), and a further clarification of the scope of the currently constrained industries. Energy Efficiency Level 2023 Edition” is an important policy constraint document for China’s chemical industry to carry out technological transformation, industrial upgrading and reduce energy consumption, which is of great importance to the sustainable development of China’s chemical industry in terms of production period, as well as the improvement of its competitiveness in the global market and the integration of backward production capacity in the country.

Figure 1 NDRC released “Energy Efficiency Benchmarking Levels and Benchmarking Levels in Key Areas of Industry (2023 Edition)”.

This latest policy requirement of “Energy Efficiency Level 2023 Edition” will have the following impacts on China’s chemical industry:

Firstly, the scope of energy efficiency index requirements for Chinese chemical enterprises is gradually expanding, and the chemical industry is an important reform direction for China’s energy saving and carbon reduction in the future. According to the 2023 version of the energy efficiency level requirements, for the chemical industry, there are six new sub-industries, the chemical industry currently includes oil refining, coal coke, coal methanol, coal olefins, coal ethylene glycol, caustic soda, soda ash, calcium carbide, ethylene, paraxylene, yellow phosphorus, synthetic ammonia, monoammonium phosphate, diammonium phosphate, ethylene glycol, urea, titanium dioxide, PVC, purified terephthalic acid, and radial tyres.

Therefore, the energy efficiency index constraints for the chemical industry have basically included most of the industry scope, these chemical industries, belonging to the scope of the bulk chemical industry, have been developed in China for a long time, and older installations account for a larger proportion of the industry, so the level of energy efficiency is lower. The reaffirmation and addition of the scope of the chemical industry is also a further sorting out of the chemical industry, which will help to improve the energy efficiency level of the chemical industry.
Secondly, there are not many chemical industries with low energy efficiency levels that are not included in the scope of constraints. According to the combing of the chemical industry chain, I found that the chemical industry is not included in the scope of the constraints, such as the polyolefin industry, basic chemical production industry, polymer materials and related industries, carbon fibre and related industries, polyester industry, polyurethane industry, pharmaceutical and pesticide intermediates industry, dyestuffs and related industries, phosphorus chemical industry, other industries, fluorine chemical industry, and the comprehensive use of light hydrocarbon, etc. These industries, on the one hand, are in the middle of China’s chemical industry.
These industries, on the one hand, are in the beginning stage of China’s chemical industry development, China’s own scale is small, the influence and competitiveness of the industry is weak, such as polyurethane, fluorine chemical industry, pharmaceutical intermediates, carbon fibre and polymer materials industry, etc., China’s social development and industrial upgrading still needs the support of these chemical industry-related products, so China’s current attitude towards this type of industry is mainly to support and encourage; On the other hand, some industries have various types and modes of production, and it is impossible to agree on the level of energy efficiency of production according to a certain type, which is seriously unfair to some enterprises, such as pharmaceutical and pesticide intermediates, fluorine chemical industry, and polymer materials industry.

Third, enterprises that cannot achieve energy efficiency reduction through technological transformation will face elimination. The “industrial key areas of energy efficiency benchmark level and benchmark level (2023 edition)” also clearly stipulates that, in principle, should be completed by the end of 2025 technical transformation, or will be eliminated out.
And the policy also clearly stipulates the exit mechanism, that is, “for energy efficiency below the benchmark level of the stock of projects, localities should be clear transformation and upgrading and elimination of the time limit, the development of annual transformation and elimination plan, guide enterprises to carry out energy saving and carbon reduction in an orderly manner to carry out technological transformation or elimination of the withdrawal of the time limit will be the transformation and upgrading of energy efficiency to above the benchmark level, for the projects that can not be transformed on schedule to complete the elimination of”. phase-out”.

From the scope of the chemical industry as currently stipulated, among them, there are enterprises with substandard energy efficiency levels in oil refining, coal coke, coal methanol, a small number of coal olefins, caustic soda, soda ash, calcium carbide, yellow phosphorus, synthetic ammonia, etc., and some of these industries account for a large proportion of the enterprises with substandard levels of energy efficiency, such as small-sized local refineries, coal coke, and some of the enterprises in the salt chemical industry. I observed that these industry leaders and powerful enterprises are actively laying out technological transformation programmes and measures, while small enterprises may have accepted the reality of being eliminated.
Fourthly, it is conducive to the elimination of outdated production capacity in China’s chemical industry, which will raise the expectation and target for the development of “Peak Carbon”. Under the guidance of the overall goal of reaching peak carbon by 2030, China’s chemical industry, as the third largest industry in terms of carbon emissions, is bound to be subject to the strong policy constraints of the peak carbon goal, of which the elimination of outdated production capacity is the main control method.

In the “Peak Carbon Guidelines”, it is clearly stipulated that China’s oil refining capacity is set to be controlled at 1 billion tonnes, and accordingly the total amount of China’s oil refining industry is controlled on the premise that the total amount of oil refining and chemical basic raw material products will also be controlled. With and industrial key areas of energy efficiency benchmarking level and benchmark level (2023 version), “Petroleum and Chemical Industry” 14th Five-Year Plan “Development Guidelines and 2035 Vision”, “limited phase-out of backward production processes and equipment generating industrial solid wastes that seriously pollute the environment directory”, “industry energy saving, carbon reduction, transformation and upgrading of the Implementation Guide 2022 Edition” and many other policy documents complement and drive each other.

Under the influence of such policies, I expect that in the next 2-3 years, China’s chemical industry will usher in a wide range of elimination wave, small and micro-sized enterprises have withdrawn, backward production capacity has been purged, and the overall competitiveness of enterprises increased rapidly. Therefore, if chemical enterprises want long-term sustainable development, the only way is to achieve energy efficiency and carbon emission reduction through technological transformation.

Why is everyone putting up BDO units?

According to my observation, up to now the scale of China’s BDO plant is at 2.85 million tonnes/year, the industry scenario is high, and the overall start rate is good. However, according to statistics, the scale of the proposed construction in the next five years more than 1.85 million tonnes, that is to say, the future of China’s BDO industry will achieve a doubling of production capacity growth.

According to the proposed BDO project statistics found that the raw material own project accounted for about 71%, purchased raw materials accounted for about 29% of the project. And calcium carbide method projects accounted for about 83%, natural gas method accounted for about 17%. Among them, the proportion of projects with matching is about 71%, while the proportion of projects without matching is about 29%.

First, BDO is an important basic chemical raw material, can extend the industry chain is numerous!

BDO is an important raw material for the development of China’s chemical market, but also the extension of China’s crude oil chemical industry chain is blocked, the development of coal chemical industry policy is restricted, it can be worthwhile to study and develop an important direction, is the focus of the industry’s attention. According to my investigation, the current BDO production process in the Chinese market mainly includes the following four: First, Reppe method with formaldehyde and acetylene (calcium carbide gas) as raw materials; Second, butadiene acetoxylation method with butadiene and acetic acid as raw materials; Third, propylene oxide method with propylene oxide/acryl alcohol as raw materials; Fourth, n-butane / maleic anhydride method with n-butane / maleic anhydride as raw materials. Among them, the third and fourth process routes are called propylene oxide, acryl alcohol, n-butane and maleic anhydride, respectively, depending on the initial raw materials.

As an important basic chemical raw material, BDO has a wide range of downstream applications. According to my investigation, BDO is now mainly developed towards THF-PTMEG industry chain, in which PTMEG can be used as spandex, PU slurry, TPEE, waterborne polyurethane and other products, such as TPU, synthetic leather, clothes and textile fields, all of which have BDO as a raw material for the production of chemicals in the figure.
Another direction that can be extended is PBAT and PBS, as an important representative of biodegradable plastics, of which PBAT is an important type of development in the field of biodegradable plastics in China, and is also the type with the largest scale of production, and the downstream can be used as the production of disposable plastic products and so on. In addition, it can be extended to PBT and other engineering plastics, such as PBT modification, short fibres, etc., which are widely used in the field of automotive parts, clothes processing, etc.

BDO can be used as a raw material for GBL production, downstream can be used as the production of NMP and NVP, of which NMP is used in lithium battery auxiliary materials, while NVP can produce PVP, downstream as lithium battery precursor dispersant and environmental protection materials in the additive, the application is very wide.

It is also due to the wide range of downstream applications of BDO, which provides chemical companies with a number of alternative directions, and has become an important reason for the high degree of attention from enterprises. I think that with the progress of chemical technology, BDO downstream extendable direction will continue to expand.

Second, degradable plastics policy attribute drive

In my opinion, the reason why BDO is highly concerned is because of the attributes of downstream degradable plastics. According to the above can be seen, with BDO as raw material downstream can produce degradable plastics PBAT and PBS, of which PBAT is the degradable plastics industry to be the largest varieties in the scale of the future to be in the scale will be more than 10 million tonnes / year, the other varieties of plastics, the future to be in the industry growth rate of more than 30%.

On 19 January 2020, the National Development and Reform Commission and the Ministry of Ecology and Environment announced the “Opinions on Further Strengthening the Control of Plastic Pollution”: “By the end of 2020, China will take the lead in banning and restricting the production, sale and use of some plastic products in some areas and fields, and by the end of 2020, the consumption of disposable plastic products will be significantly reduced, and substitutes will be promoted.”

In July 2020, the National Development and Reform Commission (NDRC), the Ministry of Ecology and Environment and other nine departments jointly issued the “Notice on Solidly Promoting the Control of Plastic Pollution”, which makes it clear that from 1 January 2021, the use of non-degradable plastic shopping bags will be prohibited in shopping malls, supermarkets, pharmacies, bookstores and other venues in built-up areas of municipalities directly under the central government, provincial capitals, and cities with single-status plans, as well as in catering packaged takeaway services and in all kinds of exhibition activities, but Temporarily prohibit even rolled bags, preservation bags and rubbish bags. This is also known in the industry as the landing of the most stringent plastic restriction in history. Subsequently, Shandong, Henan, Sichuan, Shaanxi, Hainan, Hubei and other provinces introduced plastic pollution control implementation programme to accelerate the plastic pollution control work.

Subsequently, all parts of the country have introduced the corresponding “plastic restriction”, affected by this, degradable plastics in 2020 “hot” up, many companies focus on the PBAT industry, new and proposed production capacity is surging trend. According to incomplete statistics, the next five years, the domestic PBAT new production capacity will be more than ten million tonnes, which will also increase the attention to the raw material BDO.

Third, the trend of calcium carbide and natural gas chemical industry chain direction extension

In my opinion, the reason why the industry is paying great attention to BDO, in addition to its wide range of downstream applications and degradable plastics properties, there are also its calcium carbide and natural gas chemical reasons.

Calcium carbide is an important inorganic chemical raw material, is an important carbon source in the chemical production supplement, is mainly used in the production of PVC, followed by vinyl acetate and other chemical production, etc., BDO is only one of the calcium carbide as raw material chemical production. From the current market development results, the PVC industry is basically in a surplus of the status quo, vinyl acetate has presented a serious surplus situation, the other chemical products market boom in general, which highlights the BDO industry chain’s high degree of prosperity characteristics.
Therefore, if the chemical production with calcium carbide as raw material, BDO industry chain is its important consideration direction.

For natural gas chemical industry, natural gas is currently mainly applied as a fuel, in which it has an irreplaceable role in civil and industrial heat source supplementation. As the supply of natural gas continues to rise, the attributes of natural gas based on safeguarding civil use have been successively relaxed to some industrial raw material applications, thus giving rise to the development of natural gas chemical industry.

Natural gas chemical production can be used as the production of ammonia, methanol, hydrogen, acetylene, hydrocyanic acid and carbon black. Among them, synthetic ammonia is already in the status quo of serious surplus, and although hydrogen is in line with the development trend of hydrogen energy, its non-transportable characteristics add to its huge development limitations. And the characteristics of hydrocyanic acid is highly toxic, resulting in the production of natural gas as a raw material can not be used. Therefore, if the choice of natural gas chemical industry, which acetylene to BDO production method, it becomes important, valuable and feasible to consider the direction, which led to the development of natural gas production BDO chemical industry.

In conclusion, I would like to say that the reason why BDO has been widely noticed is that it is a stage characteristic of the development of the chemical industry and an important signal of the shift in chemical policy. Future chemical production will focus more on low-carbon, low-energy and high value-added production methods, BDO is only one of the main products, such as methane, ethane, propane and butane chemical industry chain development, and ammonia as the raw material for the production of high-end amine chemical production, or will become an important direction in the future, it is recommended that we pay close attention to.

How much does the cost of making BDO vary from process to process?

I see that with the deepening development of China’s chemical industry, the upgrading of the level of chemical technology, as well as the shift in policy requirements in the chemical industry, have brought about the development of a number of chemical markets, such as the feasibility of production of products brought about by different production processes. It is also due to the different production processes, resulting in a significant shift in the competitive environment of the market.

BDO is an important raw material product for the development of China’s chemical market, and is also an important direction that can be worth studying and developing after the current obstacles to the extension of China’s crude oil chemical industry chain and the restrictions on the development policy of coal chemical industry, which is the focus of the industry’s attention at present. According to my investigation, the current Chinese market BDO production process mainly includes the following four:
I. Reppe method with formaldehyde and acetylene (calcium carbide gas) as raw materials;
II. Butadiene acetoxylation method with butadiene and acetic acid as raw materials;
iii. Propylene oxide method with propylene oxide/acryl alcohol as feedstock;
iv. n-butane/phthalic anhydride method using n-butane/phthalic anhydride as feedstock.
Among them, the third and fourth process routes are called propylene oxide, propylene alcohol, n-butane and maleic anhydride, respectively, depending on the initial feedstock.

As I see it, natural gas BDO has low investment cost and clean production process, but the application of natural gas in chemical production in China is limited, so the scale-up of natural gas BDO industry is growing slowly. The calcium carbide method, on the other hand, due to the low price of calcium carbide raw material, leads to the production of BDO cost is not high, the market competitiveness is obvious. Maleic anhydride method is based on the development trend of “oil conversion” in China’s oil refining industry, in which the extension of the n-butane industry chain by-products of alkylation units is an important direction of concern for oil refineries, and is also an important trend in the growth of the scale of the current BDO industry. As raw material prices belong to different market environments, the fluctuation of its situation there is a significant gap between the different processes of BDO production cost difference is how big.
First, calcium carbide method BDO is still the most competitive production method

According to my observation, China’s BDO production process, calcium carbide method is still the most competitive production method. According to the business community data show that the mainstream price of calcium carbide in northwest China at 3900 yuan / tonne, methanol market price of 2640 yuan / tonne. According to the cost calculation of BDO by calcium carbide method, the cost of BDO by calcium carbide method in China is about RMB 10,374/tonne, which is the lowest cost among the different production methods compared. It should be noted that the price of calcium carbide BDO is the price of calcium carbide in Northwest China, so the cost of BDO production in Northwest China using the calcium carbide method is measured. The downstream of BDO produces other chemicals locally, so the competitiveness of the BDO market requires a comprehensive assessment of the downstream of the industrial chain to the level of competitiveness of the target consumer market. In addition, there are large differences in the price of calcium carbide in Xinjiang, Inner Mongolia and Shaanxi, and there are bound to be differences in the BDO produced by the price of calcium carbide in different regions. As well as own calcium carbide and purchased calcium carbide BDO production units, the cost of BDO also has a huge difference. Comprehensive comparison reveals that the BDO produced by own Shaanxi calcium carbide has the lowest cost and the most obvious competitiveness. The BDO production method of calcium carbide method is the earliest extended production method and also the most competitive production method at present. However, due to the national requirements for the limitation of calcium carbide mining, as well as the high energy consumption characteristics of the calcium carbide production process, may become the biggest obstacle to limit its calcium carbide BDO production in the future. I expect that the new scale of calcium carbide BDO will be limited in the future, and the competitiveness will still exist for a long time.

Second, natural gas method BDO there are very obvious regional differences according to my observation, China’s BDO production process, natural gas as raw material BDO production there are obvious regional differences, of which own natural gas BDO device competitiveness is the highest, followed by purchased industrial natural gas device competitiveness is the worst. According to the National Bureau of Statistics data show that the price of industrial natural gas in East China is 4.3 yuan / cubic metre, according to business statistics show that the market price of hydrogen in East China is 2.5 yuan / cubic metre. According to these two prices, the natural gas method BDO production costs in 14,180 yuan / tonne, belonging to the statistics to the three different production methods in the highest cost of production methods. However, it should be noted that in China’s natural gas method BDO, the cost of natural gas accounts for about 79% of the total cost of BDO, which is the largest cost share. So the price of natural gas has a huge impact on the cost of BDO. And natural gas as a raw material for chemical production, there is a huge difference in price in different regions. According to my survey, the price of industrial natural gas in the Northwest market ranges from RMB 1.5/m3 to RMB 4.5/m3. If the lowest price of RMB 1.5/m3 is measured, the cost of BDO is only RMB 6,900/tonne, which is the lowest-cost type of production among the three statistical methods. And if measured at $2.5/m3, the cost of BDO is only $9,500/tonne, which is also among the lowest production types. So I think that if natural gas is used as raw material to produce BDO, if you want to get sufficient market competitiveness, such as using the lowest natural gas price. So the price of natural gas becomes the key to the feasibility of natural gas method BDO production. The natural gas method BDO production method belongs to the low-carbon, low-energy production method, is an important direction after the reduction of the threshold of the natural gas chemical production policy, but also the current industry is concerned about the focus of the product.

Third, maleic anhydride BDO competitiveness is relatively weak according to my observation, China’s BDO production process, BDO produced from maleic anhydride as raw material, its competitiveness is relatively weak. According to the business community of maleic anhydride market annual average price of 8780 yuan / tonne, the cost of maleic anhydride BDO is about 13959 yuan / tonne, belonging to the three kinds of production process, the cost of production type is relatively high. Maleic anhydride method BDO is using maleic anhydride as raw material, in which maleic anhydride comes from n-butane method production and coked benzene method production. n-butane method is the mainstream production method of maleic anhydride products at present, and it is also an important path to solve the problem of oil conversion of refining enterprises at present. The n-butane in n-butane method is the key to solve the by-products of alkylation device, and also determines the cost of maleic anhydride. If the maleic anhydride method BDO products using refining in alkylation by-product of n-butane as a starting raw material production, which maleic anhydride method BDO cost is expected to be reduced by another 300 yuan / tonne or so, that is, to reach 13,295 yuan / tonne. However, compared with other production methods, the cost of maleic anhydride BDO is still high and its competitiveness is weak. In addition, I observed that the future n-butane method of maleic anhydride is the mainstream way to add new plant size, the future proposed in the construction of a large number of projects will increase the speculation on n-butane, resulting in the price of n-butane deviated from the main line of the LPG market value, which further weakened the competitiveness of the maleic anhydride method of BDO in the market. Finally, I would like to say, BDO is a key link in the development of fine chemicals and degradable plastics industry, is a basic key raw materials. the production of BDO products, for the extension of the industrial chain and the development of the rate of refinement has a very important role. In the future, calcium carbide method will still be the most competitive production method, but the policy restriction and liberalisation of natural gas chemical industry will also become an important force to drive the development and upgrading of the industry.