2024 BDO market review: high demand &higher supply

BDO capacity still expanded significantly in 2024. By the end of 2024, the capacity of BDO was at 4597kt/year in Chinese mainland, up by 1310kt/year or 39.9% on annual basis.

The BDO capacity greatly increased, with growth rate of near 40% for two consecutive years. Judging from the pace of capacity expansion and release in 2024, the density was high in the first half of the year, and the monthly expansion was relatively small. Although the capacity expansion slowed down in the second half of the year compared with the first half, the capacity expansion was relatively large in a single month.

With ongoing capacity expansion, the utilization rate of BDO units decreased and more units cut production. The average operating rate of BDO plants was at 62% in 2024, down by six percentage points on the year. The yearly operating rate of BDO plants gradually fell in recent three years.

Due to falling operating rate, the annual actual output growth rate was significantly lower than the growth rate of capacity. In 2024, the annual output of BDO was approximately 2.85 million tons, a year-on-year increase of near 21%, and the output growth rate remained high. (Output is preliminary statistical data and may be slightly adjusted after approval)

The demand for BDO still enjoyed strong support in 2024, with apparent demand estimated to be around 2.67 million tons, up by 18% year on year. BDO downstream market lacked highlights in 2024 but downstream market was also under capacity expansion. Rigid demand for BDO was high. In addition, exports of BDO was strong too in 2024, expected to be above 200kt throughout the year. The final export data has not been updated by China Customs.

In addition to the decrease in utilization rate brought about by capacity expansion, competition within the market has significantly increased and the prices of BDO gradually declined.

BDO price was under downtrend in 2024. In the first half of the year, the price fluctuations were relatively small. On one hand, this was due to cost pressures, with factories maintaining prices under cost pressure. On the other hand, many capacity expansion projects in the first half of year were well-matched with downstream demand and export sales, resulting in a relatively small impact on the market. In the second half of the year, the market faced more obvious oversupply due to the accumulation of capacity expansion. Additionally, with an increase in external sales from certain projects in the second half of year, price competition became more intense.

Excessive price competition led to a "low point" in BDO prices in the third quarter. Under the pressure of significant losses, BDO prices rose in the fourth quarter. Although there were still loss pressures, the cash flow showed a noticeable improvement compared to the comprehensive losses in the third quarter.

The annual average price of BDO was around 8,694yuan/mt in 2024, representing a year-on-year decline of approximately 21.5%. As prices fell, the cost pressures of BDO companies increased, and cost differences between companies began to emerge, leading to more production halts throughout the year.

In terms of market fundamentals on BDO market, although demand also saw high growth, continuously intensive startup of units on the supply side resulted in oversupply, intensified internal competition, a drop in prices and increasing pressure from the losses in the industry. Consequently, companies encountered higher operational pressures, making it essential to reduce costs, increase efficiency and maintain reasonable price in operation.