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On March 5th, the global industrial leader BASF issued a force majeure statement. Due to the fire in the northern plant of BASF’s Ludwigshafen plant on March 3, the leakage of hydrogen, carbon monoxide and oxygen-containing gas caused the company’s internal supply of hydrogen and carbon monoxide to be interrupted. The production of neopentyl glycol is subject to force majeure, and the northern plant of the Ludwigshafen plant cannot continue to produce neopentyl glycol.
After the news came out, it undoubtedly made the neopentyl glycol market worse. There was a bigger gap in the supply that was not rich, and the market mentality gradually shifted from divergence to one-sided, but more people wait and see.
Germany’s BASF neopentyl glycol plant has a production capacity of 80,000 tons/year, and its production capacity accounts for 45.7% of the entire Europe and 2% of the world. For China, Germany is also one of the sources of imports. From the data of the past two years, the neopentyl glycol imported to China is about 3,000 tons per year, accounting for around 4%. So from this data alone, even if all German imports are missing, it will only lose two to three hundred tons of supply per month. For domestic production of twenty to thirty thousand, the impact will not be too big.
But internationally, the supply in Europe will be greatly reduced, and price increases are inevitable. In addition, if one party has difficulties and support from all parties, domestic BASF will definitely spare no effort to support and assist. Other domestic factories with certain export qualifications will not miss this opportunity, whether it is really expanding exports or taking the opportunity to create momentum and hype. There is bound to be.
The issue of BASF’s device in Germany can be traced back to last year, and it is its butanol device. On December 8, 2020, BASF sent an urgent letter stating that the n-butanol plant at its Ludwigshafen plant in Germany had encountered unforeseen technical problems and was forced to shut down the plant and start repairs. The accident was beyond BASF’s reasonable control. , Which affected the supply of n-butanol, so the supply of n-butanol had to be allocated. The domestic butoctanol price has also benefited from this, which has boosted the price increase.
It is knew that this octanol device just returned to normal after February, and now it is facing neopentyl glycol force majeure. It is unclear whether the same result will appear on Neopentyl. And the fuse of Xinwu’s surge in November last year was also due to LG’s parking, so it had to increase the market’s cautious mood. In addition, since February, many chemical plants in Europe and the United States have been shut down due to extreme cold weather, and the gap of each product has increased. The two major domestic export factories also reflect that exports in the recent period have indeed increased, but their growth has not been as good as the domestic market, and they still focus on ensuring domestic supply. Under the circumstances of such force majeure, the rise in Europe has become inevitable, and the export of various regions to Europe will increase, especially the Asian countries with the first share of neopentyl glycol.
Returning to the domestic market, neopentyl glycol itself entered a stagflation period after a strong rise after the CNY. The confrontation between buyers and sellers is very strong, and in this game, some profit-making traders have already lost their pockets. It will become more difficult for the market to continue its upward path. Germany’s BASF announced force majeure. Although it cannot directly drive the entire market price up again, it will strengthen the confidence of neopentyl glycol factories, especially those that have export shares. Once the domestic production transfers to the European market, the domestic market will be even better. Struggling and confrontation, the downstream factory is more likely to compromise, and the neopentyl glycol factory holds a greater right to speak. The same goes for South Korean LG’s exports, and its market will also shift from China to a certain extent.
However, unlike the last time when LG equipment was shut down, this incident may highlight its influence in the later stage. After all, as for China, Germany and South Korea have a large gap in their supply, and South Korea’s LG has a wider supply range in the international arena. Therefore, in the short term, the occurrence of this event can further promote the downstream acceptance of the current high level, and only if it is firmly stabilized can there be further rises. The degree of its subsequent impact still needs to pay attention to the substantive changes in international supply and demand, and it is a high probability event that the high position is firm or the upward trend is maintained.
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Neopentyl glycol is a unique polyol. Due to its high chemical and thermal stability, it has excellent performance in many end applications, especially the production of polyester and alkyd resins used in various coatings and plastics. It is an important raw material for the production of polyester fiber resin, which is used to produce coatings, unsaturated polyester resins, alkyd resins, lubricants and plasticizers.
We are supplying NPG from Wanhua Chemical (Yantai) Petrochemical Co., Ltd., with a total production capacity of 80,000 tons, which is China’s largest and the world’s top five neopentyl glycol supplier.
Please contact us at exp1@gzchem.com /info@gcresin-paint.com