New report on butanol market

Given their specific solvent properties, butanol and its derivatives are important ingredients of many paints and varnishes. While the use of solvent has, in general, declined due to a shift towards water-borne paints and varnishes, products based on butanol can also be used as coupling agent in water-borne formulations. Global demand for butanol rose by, on average, 2.7% p.a. between 2005 and 2013.

Various Solvents are Dominating Application

Butanol is a higher alcohol that is mainly produced through oxo-synthesis of propylene. Almost 12% of total global butanol output are directly used as solvent. The largest share, amounting to almost 1.5 million tonnes in 2013, however, is consumed in manufacturing acrylate, which is used in water-borne paints but also detergents, adhesives, and textiles. The second most important application is the production of acetate, which is used as solvent in automotive coatings or as ingredient in a range of cosmetics and pharmaceutical drugs. Glycol ethers based on butanol are highly suitable for the use as solvent in water-borne varnishes, given their miscibility with water. Also, phthalates manufactured from butanol are playing an important role as plasticizer in the processing of PVC.

Growth Market Biobutanol

Besides the commercial use of butanol in chemical applications, this alcohol is also deemed to offer significant potential for the biofuel industry. Already existing and progressing technologies to produce biobutanol by the fermentation of biomass are increasingly becoming the center of attention. Butanol offers a range of advantages when compared to conventional biofuel made from ethanol: Butanol has a higher energy content and is easily miscible with diesel and gasoline. In addition, it can be combusted in conventional Otto-cycle engines without modifying the engine. Bioethanol, however, already is an established biofuel in Europe and North America, and a changeover of production facilities to manufacture biobutanol would be expensive. Another possibility is converting the bioethanol that is being produced into butanol. Adequate technologies, however, are still in the initial stages of development.

China Dominating Market

In 2013, Chinese processors consumed about the same amount of butanol as Western Europe and North America taken together. Ceresana forecasts demand for butanol on the saturated markets of Western Europe and North America to increase by only 0.4% and 0.5% p.a. respectively until 2021. As development in industrialized Asian countries such as Japan will falter as well, China will expand its dominating role on the market for butanol even further. The main motor of this growth is the construction sector, followed by the growth markets wood processing and the automotive industry. Demand for butanol on the part of Chinese processors is projected to amount to almost 1.64 million tonnes in 2021.

Contested Export Markets

Faced with an only moderate increase of demand or even a decline of market volume in many countries during the past eight year period, competition for access to exports markets in emerging countries increases. China is one of them, but also smaller markets such as Brazil. Yet as these countries already possess sufficient production capacities to satisfy domestic demand or are currently increasing them, an increasing surplus of butanol on the world market is the result. According to the analyses of experts at Ceresana, this trend will continue on the medium-term, resulting in a decline of capacity utilization; also, prices will not increase as rapidly as they had in the past. Countries reporting an excessive output of butanol are the USA in particular, exporting 213,000 tonnes of butanol in 2013, but also Russia, Malaysia, Taiwan, and South Africa.