The cost of BDO: Reppe and maleic anhydride

The turnaround of BDO units was intensive in Jul-Aug, 2023. The operating rate of BDO plants gradually ascended after some units restarted from turnaround in early-Sep, which has recovered to around 76% now, close to the yearly high. New BDO units are scheduled to start operation later. Therefore, price of BDO is estimated to reduce slowly in short run.

Supply of BDO recovers after the run rate increased, and downstream demand also slightly warms up in Sep, during traditional peak season. Supply and demand of BDO is estimated to be balanced in short run. Buyers hold bearish view toward market trend in expectation of rising supply. Increasing sellers show watch-and-see stance. Price of BDO starts reducing slightly in Sep but the reduction is slow supported by demand and strong cost.

Recently, prices of calcium carbide and methanol are both firm. Price of natural gas increases too and supply is tight. Although BDO capacity under maleic anhydride technology has not started operation in China for the time being, price of maleic anhydride also surges recently.

Price of calcium carbide started moving up from early-Aug when cost advanced and supply reduced due to the turnaround of units. In East China, the price of calcium carbide has been around 3800yuan/mt and near 3300yuan/mt in Northwest China, which did not surge to the level at the beginning of 2023 but hit second yearly high. Price of methanol slowly climbed up from end-Jun impacted by higher commodity market. The raw material cost of Reppe-based BDO increased apparently on the month in recent two months.

The cost of maleic anhydride-based BDO rose more apparently. Price of benzene soared when oil price moved up and price of commodities like styrene hiked, coupled with the unit issue. Price of maleic anhydride also greatly chased up.

Note: Reppe method is based on calcium carbide and methanol as raw material to calculate, not under natural-gas route

After cost increased, price of BDO has been closer to the cost under different technologies. Especially, after the cost of maleic anhydride-based BDO rapidly advanced, the price of BDO has been lower than the cost line.

Above cost calculation is based on the production raw material of BDO. Current BDO plants in China are mainly forward-integrated with calcium carbide, methanol and maleic anhydride etc. The energy cost is greatly different among various regions. The conventional cost of BDO is rising on the month. Supply of BDO is recovering now and new supply will rise in Sep and Oct. That means the industrial competition is expected to be intensified, which will more challenge the integration of companies and the ability to hold low cost.