USES

Butyl acetate (butac) is a colourless, flammable liquid, most commonly used as an industrial solvent. Close to 90% of total butac output is used as a lacquer solvent in automotive paint and surface coatings for wood furniture, and in a variety of coating resins including epoxies, urethanes, cellulosics, acrylics and vinyls, as it provides good flow and brush resistance when used with these resins.

Butac is also used as a synthetic fruit flavouring in foods such as sweets, ice cream, cheeses and baked goods. Besides flavouring, butac is used as an odour enhancer in perfumes and pharmaceuticals.

SUPPLY/DEMAND

The majority of butac production in Asia is used as industrial solvent in the paint and coating industry. Due to a slowdown in regional economies over the last year, manufacturing has slowed, weighing demand for butac, which market sources said barely tops 800,000 tonne/year now.

Improvements in demand are deemed unlikely in the near-to-mid term market sources said, given murky macro-economic forecasts for the region.

For instance, China’s economy is expected to grow only about 6.5% for 2017, a shade lower than the 6.7% growth in 2016. In India, domestic demand was weak, with many players staying away and awaiting more economic stimulus after state-level elections in March-May. Asia’s butac market is widely seen as oversupplied.

China is the largest producer in Asia, with capacity sharply increasing in the last three-to-five years. Total nameplate capacity burgeoned to nearly 1.2m tonne/year by 2015.

But as demand growth failed to materialise, the ensuing length in supply had taken its toll on regional butac producers, with those in China hardest hit. According to market players, a few Chinese butac makers have either sized down operations or totally exited the market since 2016.

As the main exporter in the region, China’s usual outlets in southeast Asia are Thailand and Vietnam, which collectively import about 30,000-50,000 tonne/year. Indonesia has also started to rely more on imports in the last year, after a 25,000 tonne/year plant was said to have stopped operating in 2016 due to poor margins. Other butac-producing countries include Japan, Korea, Taiwan, Malaysia and Singapore and Korea have turned net importers in recent years, while Taiwan is broadly self-sufficient, with some sporadic surplus volumes for small-volume exports. Malaysia and Singapore are key competitors to China for the butac import market in southeast Asia."

PRICES

The main drivers for Asia’s butac spot prices are raw material values. Butac prices rose nearly 30%, from below $700/tonne CFR (cost-and-freight) southeast (SE) Asia in early January 2016 to hit more than $880/tonne CFR SE Asia in February 2017.

This tracked similar gains in feedstocks n-butanol (NBA) and acetic acid. According to data compiled by ICIS, NBA settled 30% higher at $775/tonne CFR SE Asia in February 2017. Acetic acid grew even more sharply – more than 40% to $430/tonne CFR SE Asia.

TECHNOLOGY

Butac is made commercially by esterification of acetic acid with n-butanol (NBA) in the presence of sulphuric acid, which acts as a catalyst.

The acetic acid, butanol and sulphuric acid are heated in a reactor to 89˚C (192˚F). Vapours containing butac, butanol and water are removed and condensed. The top layer is fed to a low boiler column, where unreacted alcohol is flashed off and recycled to the reactor.

OUTLOOK

In the near- to mid-term, the upside potential of butac prices in Asia is likely to remain capped by lacklustre demand in the region.

To minimise unsold volumes and protect their margins, butac producers are unlikely to also discontinue their current strategy to run way below capacities and match demand conditions. Raw materials are likely to remain key drivers for Asia’s butac prices in the near term, market players agreed. Sentiment in upstream products like propylene and methanol could impact on butac too, given that their respective directives of n-butanol and acetic acid are key ingredients for butac production.

In 2017, acetic acid prices may still hold relatively steady as supply is poised to tighten on upcoming turnaround closures. This would help to boost butac’s prices. But, as 
n-butanol may slow down on weak market sentiment, this may off-set the strengths in acetic acid, thereby limiting fluctuations in Asian butac prices.