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Bio-based
1,4-butanediol is primarily used for the production of polybutylene
terephthalate (PBT), which is an engineering plastic that is further utilized
in the automotive industry for the production of interior and exterior
automotive components, owing to its excellent durability under thermal stress
and harsh chemical environments. Bio-based products are made from renewable
resources that are less toxic to the environment. They cause less pollution by
emitting very less carbon emissions that can be harmful to the environment as
opposed to standard petroleum-based products. Moreover, bio-based products can
be produced from a wide range of materials and also perform very well in most
conditions. Bio-based products are biodegradable and reduce the possibility of
contamination of soil or underground water during its transportation, storage,
or use. Owing to these benefits, the demand for bio-based products including
bio-based 1,4 butanediol is expected to increase in the upcoming years. Bio-Based 1,4-Butanediol market size is forecasted to reach US$288.2 million by 2027, after growing at a CAGR of 7.8% during the forecast period 2022-2027.
In addition to
this, fluctuating oil prices are another factor that is likely to drive the
demand for bio-based 1,4-butanediol. Some of the raw materials for conventional
1,4 butanediol are obtained from crude oil and natural gas. As a result,
fluctuations in the prices of crude oil can cause volatility in the prices of
raw materials required for the production of conventional 1,4-butanediol. For
instance, in 2020, the international benchmark for petroleum prices across the
world also known as Brent crude prices decreased to US$ 9.12 per barrel, which
was the lowest record since December 10, 1998. In April 2020, India’s Crude Oil
Basket (COB) reached US$ 19.90 per barrel, which was the lowest record since
February 2002. During the first 11 months of the year 2020-21, the average
annual price of India’s COB was around US$ 42.72 per barrel, which decreased by
30% more than the average COB price in 2019-20. Furthermore, as per revised
estimates for 2020-21, the COB has increased by around 35% from its initial
budget estimate. In this way, the uncertainty regarding the price of crude oil
also increases the price of raw materials required for the production of
conventional 1,4-butanediol. Hence, such instability and fluctuating prices of
petroleum-based raw materials are expected to increase the demand for bio-based
1,4 butanediol derived from renewable resources such as sugar, cellulosic
feedstock, and more. This is anticipated to create an opportunity for the
growth of the market during the forecast period.
Bio-based
1,4-butanediol polymers are used in interior and exterior parts of passenger
vehicles such as mirror housings, connectors, and fuse boxes as the polymer
such as polybutylene terephthalate, is lightweight and provides good durability
in the harsh chemical environment. Moreover, bio-based 1,4-butanediol is used
in spoilers of passenger vehicles. The growing demand for passenger vehicles on
account of the growing income level of the middle-class segment will create
more demand for bio-based 1,4-butanediol in this automotive segment. For
instance, according to the International Organization of Automotive
Manufacturers, in 2021, global passenger vehicle production was 57 million
units showing a 2% increase in comparison with the 2020 production volume.
According to the International Organization of Motor Vehicle Manufacturers, in
2021, global light commercial vehicles production stood at 18.6 million units
showing 8% in comparison with 17.2 million produced in 2020 global. According
to the International organization of Motor Vehicle Manufacturers, in 2021,
heavy truck production in North America stood at 6.22 million units showing a
30% increase in comparison to 4.79 million units produced in 2020. The increase
in passenger vehicle production will create more usage of bio-based 1,4-butanediol-based
polymers in the interiors and exteriors of passenger vehicles.
The COVID-19 outbreak led to major economic
problems and challenges for the automotive, electronics, textile, and other
industrial sectors across the world. According to the World Bank, the global
GDP growth declined by 3.6% in 2020, owing to the economic impact of COVID-19. The
government of various countries across the world announced strict measures to
slow the spread of the coronavirus and only the production of essential
commodities was allowed, which impacted the non-essential commodity industries,
thereby impacting the production of bio-based 1,4-butanediol as well. Moreover,
strict lockdown measures, social distancing norms, and supply chain disruption
caused delays in the production of bio-based 1,4-butanediol, which in turn,
impacted the bio-based 1,4-butanediol market growth. Furthermore, in the year
2020, several development projects for automotive, electronics, textile and
other industrial sectors and facilities were delayed, and manufacturers were
experiencing short-term operating challenges due to supply chain disruptions
and a lack of site access due to pandemic-induced limitations. However,
economic stimulus packages allotted for multiple sectors and the start of
industrial production activities in 2021 are improving the bio-based
1,4-butanediol market growth by its increasing utilization in various
end-users. In the long run, the industry will recover the losses induced by the
COVID-19 pandemic. For instance, to strengthen the economy, governments all
across the world encouraged industrial manufacturing to foster economic growth,
as a result of which the global GDP grew by 5.9% in 2021.
In addition to
this, the war between Russia and Ukraine is creating a negative impact on the
industrial production of various sectors such as automotive, electronics,
textile, and other industrial sectors in countries like Russia, Ukraine,
Germany, France, and other European countries, owing to the decline in the
supply of materials from both the countries and major industries due to a halt
in their production activities. The ongoing conflict between Russia and Ukraine
has caused a huge impact on European car manufacturing, in particular, owing to
the risk associated with the current global supply chain. For example,
Volkswagen and BMW have closed assembly lines in Germany due to the shortage of
wiring harnesses manufactured in Ukraine by the German company Leoni. Likewise,
Porsche also announced the temporary suspension of its production of the Taycan
electric vehicle at its Stuttgart-Zuffenhausen facility in Germany due to the
component shortage caused by the Russia-Ukraine War. Likewise, the
Russia-Ukraine conflict is expected to cause additional disruptions and affect
the supply chains of semiconductors. The semiconductor chip shortage has
impacted many industries worldwide with automotive & electronics industries
among the most affected sectors. Therefore, such disruptions in the supply
chain and production activities across multiple industries, owing to the
ongoing Russia and Ukraine war are expected to hinder the growth of the market
due to a halt in industrial production in countries like Russia, Ukraine, and
other countries.
Asia-Pacific
held the largest share in the bio-based 1,4 butanediol market, owing to the
increasing end-use industries, which are accelerating the demand for bio-based
1,4 butanediol in the region. The development in the key constructions like the
residential and commercial buildings is driving the demand for
gamma-Butyrolactone (GBL) which is further driving the market for bio-based 1,4
butanediol. For instance, the Hamamatsucho Shibaura 1 Chrome Redevelopment
construction project of two 232.55-meter tall buildings is expected to be
completed in the fourth quarter of 2030. According to Statistics of Japan, the
number of construction contract orders has witnessed growth in 2021 (Jan-July)
compared to 2020(Jan-July). It went from 6,00,46,960 units in 2020 to
6,36,10,223 in 2021. Thus, the rise in the construction activity will
eventually drive the demand for bio-based 1,4 butanediol. According to the
International Trade Administration (ITA), in Australia, the investment in the
total local production of aerospace’s electric grid, aircraft, weapons, and
other systems increased to an estimated US$ 8.4 million, from US$ 8.15 million
in 2020. Also, the total local production of medical devices in Australia rose
from US$1,495 million in 2020 to an estimated US$1,539 million in 2021. The
market size is forecasted to grow in 2021 as compared to the previous year.
Thus, driving the market growth. According to the Organisation Internationale
des Constructeurs d'Automobiles (OICA), the total automobile production in
India reached 43,99,112 units in 2021, an incline of 30% from 33,94,446 units
in 2020. Furthermore, in October 2021, Godawari E-mobility Ltd. commenced the
development of an electric vehicle plant in Raipur to increase the production
of electric vehicles in the country. The development of the new facility is
scheduled to be completed by 2023. Thus, such surging automobile production is
expected to increase the demand for bio-based 1,4 butanediol for the production
of automotive parts for use in automobile engines, batteries, belts, radiators,
and more. This is expected to accelerate the market growth in India during the
forecast period. Thus, owing to the flourishing end-use industries, the bio-based
1,4 butanediol market is flourishing in Asia-Pacific.
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Bio-based 1,4 butanediol Market Growth Drivers:
Increasing Automobile Production:
Bio-based 1,4
butanediol is a primary material used in the production of polybutylene
terephthalate (PBT), which is an engineering plastic that is further utilized
in the production of interior and exterior automotive components, owing to its
excellent durability under thermal stress and harsh chemical environments. PBT
is mainly used in the automobile for weight reduction, energy absorption, and
shock absorption for bumpers. It also restricts the risk of explosion in fuel
tanks and is used in airbags, seat belts, door, and seat assemblies, along with
subsystems, bumpers, exterior trim, and various other components of the
automobile. The factors such as increasing disposable income, the rapid pace of
industrialization, and other similar factors are accelerating the demand for
automobiles, which in turn, is driving the production of the automobile. For
instance, according to the International Organization of Motor Vehicle
Manufacturers (OICA), the total global automobile production reached 80.2
billion units in 2021, an increase of 3% as compared to 77.7 billion units in
2020. Further, it states that the total automobile production in 2021 in
Europe, America, Asia, and Africa increased by 25%, 17%, 28%, and 37%
respectively in comparison to 2020. In October 2021, Godawari E-mobility Ltd.
commenced the development of an electric vehicle plant in Raipur, India to
increase the production of electric vehicles in the country. The development of
the new facility is scheduled to be completed by 2023. In 2021, Ford invested
US$ 11 billion to develop new electric vehicle facilities in Tennessee and
Kentucky to increase its electric vehicle production. The development of the
new facilities is scheduled to be completed by 2025. In this way, an increase
in automobile production in multiple regions across the world is expected to
increase the demand for bio-based 1,4-butanediol for the production of
polybutylene terephthalate (PBT), utilized in the industry, owing to its
above-mentioned benefits. This is expected to drive the growth of the market
during the forecast period.
The
Major Players in this Market Include
The major companies in the bio-based 1,4 butanediol market include BASF SE, Novamont, Shandong Land Biological Technology Co. Ltd., and others.
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