2.

1 Market Analysis

2.1.1 World consumption of oxo-chemicals

Oxo chemicals are intermediate and derivative chemical compounds which are characteristically
used in chemical and manufacturing processes of paints, plasticizers, coatings, adhesives and
lubricant additives. These oxo chemical play an important role in construction, automotive industry,
manufacturing of various types of surface coating, polymers and solvents. Besides, oxo chemicals are
the most important ingredient for the manufacturing of plasticizers, which in turn are a constitutive
part of automotive, plastics, cables and wires industry. Propylene, n-butyraldehyde and
isobutyraldehyde are the most prominent oxo chemical due to rising consumption their alcohol
derivatives in plasticizer industry.

Asia-Pacific is the global leader in the consumption of Oxo alcohols and this dominance is expected
to continue till 2020. China is the key market in the region, consuming more than half of the demand
for Oxo alcohols, followed by Japan, South Korea, and India, where consumption is growing steadily.
The demand for oxo chemical is set to increase with rising economies of Asia Pacific and reviving
economies of North America and Western Europe.

2.1.2 Global consumption of butanol

The oxo synthesis used propylene and a syngas as a feedstock in order to produce n-butanol and
isobutryraldehyde. The global capacity of butanol is estimated at 5 million tons/year in 2018.
Domestic demand is expected to remain stable with consumption rates above 90%. There are four
major regions for global butanol demand which are North America (24%), Europe (25%), Asia (13%),
China (34%), and rest of the world (4%).

Figure 2.1 shows the trend of butanol demand in several countries. In 2016, China’s demand of
butanol has decreases to 99,037 tonnes/year from 148, 011 tonnes/year in 2015 (Department of
Statistic Malaysia, 2017). The same scenario to the butanol demand in Malaysia which has slightly
decreases from 371 to 238 tonnes/year. It seems that Malaysia has lowest demand in butanol
compared to other Asian countries.
 160000
140000
Demand (Tonnes/year) 120000
100000
2014
80000
60000 2015
40000 2016
20000
0
China United State Malaysia South Korea
Butanol demand countries

Figure 2.1 Global butanol demand (Source from Department of Statistic Malaysia)

2.1.3 World Supplier of Butanol

Asia Pacific is expected to be the fastest growing market in the next seven years. Rapid urbanization
in emerging markets including India and China are driving demand from construction industry which
is contributing towards growth. Other key sectors in this region are cosmetics and textiles which
have witnessed an increasing need for butanol owing to their enhanced properties. The production
of butanol seems to be increases due to high demand in butanol.

The global supplier of butanol is dominated by several countries such as Japan, Malaysia,
Western Europe and United State. Figure 2.2 shows the trend of exported butanol by several
countries. According to Department of Statistics Malaysia, Malaysia has exported about 120,731
tonnes/year of butanol in 2016 compared to 2014 which was only 102,461 tonnes/year. This butanol
has been supplied to high demand countries such as Taiwan, India and Bangladesh.

From table 2.3, it shows the unit value of butanol exported to several countries. In 2016, the
unit value of exported butanol to Taiwan is about RM 2132.07/tonne. Beside Malaysia, other
butanol supplier company like United State and Japan also become major contribution to the global
butanol demand.

Exported Unit Unit value (RM)

country (tonnes) 2014 2015 2016
Taiwan T 4839.71 2928.64 2132.07
Bangladesh T 6469.64 4765.09 3818.38
Yemen T 0 0 4094.16
India T 4400.24 2830.14 2252.51
Table 2.3: Malaysia export statistic of butanol (Department of Malaysia Statistic)
 140000
120000
Export (Tonnes/year)
100000
80000 2014
60000 2015
40000 2016
20000
0
China United State Malaysia Japan
Butanol supply countries

Figure 2.2 World butanol supply

2.1.4 Supply and demand of Hydrogen

Hydrogen is the most used in the application of chemical processing, petroleum recovery and
refining, metal production, fabrication, aerospace and fuel cell. The majority market that used
hydrogen is in the petroleum recovery and refining then followed by chemical processing. The
fastest growing market is in fuel cell, where the demand of fuel cell for automotive sector is high due
to their characteristic which is free pollution standards.

Hydrogen Production by feedstock

4%

18%
Natural gas
48% Oil
Coal
Water electrolysis
30%

Figure 2.4: Hydrogen Production by feedstock (Source from Global Hydrogen Production".
Hydrogenassociation.org)
Asia Pacific is known as the region where dominate hydrogen market for production plants of
ammonia and high refinery output. India, China and Malaysia which having the rising in refinery
capacities make Asia Pacific become the largest market of hydrogen. The second largest market of
hydrogen is Europe and followed by North America. Overall global demand for hydrogen is expected
to increase by around 5-6% during the next five years, as a result of demand from petroleum
refinery operations, and the production of ammonia and methanol (HIS Markit, 2015). Asia will
continue to lead demand growth in line with the regions increasing growth of domestic economies.

2.1.5 Supply and demand of Propylene

Propylene has been established as a major component of the global olefins business, second only to
ethylene. It is mainly used in the production of polypropylene but it is also employed in the synthesis
of other chemicals, such as acrylonitrile, acrilic acid, oxo-alcohols, propylene oxide, and cumene.
Propylene is majorly produced as byproduct of ethylene production, by steam cracking of
hydrocarbon feedstocks, and petroleum refining.

In global market, China is the world's largest propylene producing country with about 46 million
metric tonne. Propylene production is forecast to grow over the next ten years. China, United States,
Middle East and West Europe's production share of Propylene are 26%, 14%, 9% and 13% in 2016.
Propylene production is forecast to grow at 2.3%, 4.2% per year in United States and Middle East
over the next ten years. The production capacity of propylene is about 120 Million Metric Ton in
2017 as shown in Figure 2.3. Meanwhile, the global demand of propylene is 100 Million Metric Tons.
Thus, the demand growth rate is forecasted to escalate about 4.0%/year from 2017-2025.

Figure 2.5: Global Propylene Supply & Demand (Mitsubishi Chemical Techno-Research, 2017)
 Propylene Production by Region, Country

26% China
38% United State
Middle East
14% West Europe
Other Region
13% 9%

Figure 2.6: Propylene Production by Region, Country (Mitsubishi Chemical Techno-Research, 2017)

2.1.6 Supply and demand of Rhodium

Rhodium is the most commonly used metals in a catalytic converter along with platinum, palladium,
ruthenium, iridium, and osmium. Over 80% of the world's annual rhodium supplies go into
autocatalyst manufacturing. So, the demand in this segment is critical for the metal's demand. South
Africa supplies about 80% of the world's rhodium and this concentration of rhodium-mining
operations often leads to extreme price volatility. In 2008, supply shortfalls from South Africa caused
the price of rhodium to rise to over $10,000 per oz. The economic slowdown of that year eventually
caught up with rhodium, which caused prices to collapse. Figure 2.7 shows rhodium supply and
demand in several countries. It proves that South Africa has major contribution in supplying rhodium
with 743000 oz in 2016.

Figure 2.7: Supply and demand of Rhodium (Source from www.energyandcapital.com)