USES

The oxo-alcohols chain consists of n-butanol (NBA), isobutanol (IBA), and 2-ethylhexanol (2-EH). Around 50% of 2-EH is used to make plasticisers, mainly dioctyl terephthalate (DOTP).

DOTP is a plasticizer, which is material used for plastic, typically polyvinyl chloride (PVC) to enhance its flexibility and malleability.

NBA, IBA and 2-EH have some uses as solvents but are primarily used as feedstock for other products.

NBA is a feedstock for butyl acrylate and methacrylate, butanol-based glycol ethers, butyl acetate (butac), and some plasticizers. IBA is used as a solvent for nitrocellulose, in hydraulic fluids, and as a resin modifier.

Key drivers for oxo-alcohols are the construction industry, the appliance industry, the automotive industry and industries that need imperial coating material.

SUPPLY/DEMAND

Until the end of February, supply of the oxo-NBA, IBA and 2-EH were balanced to healthy. Oxea declared force majeure on 24 February following a fire at the neighbouring syngas unit. This saw the market tighten for 2-EH first, but by the end of the quarter supplies of NBA were on the snug side. The declaration was lifted at the end of April and coincided with falling demand in many sectors due to the spread of the coronavirus across Europe and lockdowns affecting many end-user markets.

Demand in March was healthy, but saw drops in many segments in April and remained the same for May. Consumption is lower than usual and varies depending on location and application, but all in all is said to be rather resilient compared to some of the associated petrochemical markets.

Supply is ample and various producers have trimmed run rates to account for the lower demand, but there are no major maintenance programmes planned in the short term.

PRICES

A significant proportion of oxo-alcohol business is agreed on a formula related basis, which in many cases is tied into the cost of feedstock propylene, which fell by €275/tonne during March/April/May.

Freely negotiated spot prices in contrast firmed up through March, especially for 2-EH, due to the force majeure from Oxea.

NBA followed, but to a lesser extent. Once demand started to tail off in April, spot prices started to pull back for both 2-EH and NBA.

Spot prices fell during what is traditionally the peak time of April/May as the virus hit global economies and consumer confidence.

TECHNOLOGY

Oxo-alcohols are alcohols that are prepared by adding carbon monoxide and hydrogen (combined together as synthesis gas - syngas), to an olefin (propylene) to obtain an aldehyde.

The process uses the hydroformylation reaction and followed by the hydrogenation of the aldehydes formed to give a mixture of NBA and IBA. Most global production is based on the low-pressure process developed by the UK’s Davy Process Technology. LP Oxo Technology has been developed, co-marketed and delivered as a co-operation between US-based Dow Chemical and Davy Process Technology.

More than 70% of all global propylene-based oxo capacity and 90% of all licensed propylene-based oxo capacity utilises LP Oxo Technology.

OUTLOOK

There is hope that consumer confidence will start to pick up again as restrictions are lifted across Europe, but there are still many unknowns. Global macroeconomics are suffering and any return in demand is coming from a low level and expected to be very gradual.

The automotive industry is in crisis and expected to take a long time to recover, but paints and coatings and constructions sectors are due to be more supportive. The traditional seasonality in Europe through the summer is not expected to occur as nations cut back on travel and vacations.

Supply is expected to remain plentiful and there are no notable maintenance programmes scheduled for 2020. Upstream availability is healthy for now, there are various production issues, but with demand at a low level, it is not impacting oxo-alcohol players.

Through 2021, demand is expected to continue its slow recovery, in line with current economic predictions. ■