Isobutanol Market Overview
Isobutanol market size is forecast to reach $1.03 billion by 2025, after growing at a CAGR of 5.36% during 2020-2025, owing to the rising demand for isobutanol from various end-use industries such as oil & gas, automotive, solvents & coatings, pharmaceutical, and more. A major part of Isobutanol is converted into derivates which are then used as solvents in the coating industry. Isobutanol prevents blushing of certain coatings when they dry under humid conditions and improve their flow, gloss, and resistance to blushing, due to which they are widely used as a diluent in cellulose nitrate lacquers. In addition, it is extensively used as a feedstock in the production of glycol ethers and flotation aids, which is anticipated to drive the isobutanol market substantially during the forecast period.
Asia Pacific dominates the isobutanol market, owing to the rising demand for isobutanol in the automotive, chemical, solvent, and coating sectors in the region. Increased urbanization and purchases are also the key factors driving the isobutanol market in APAC.
Isobutanol is produced by propylene carbonylation. The same products are obtained in Reppe carbonylation, but the hydrogenation is effected by the water-gas shift reaction.
Isobutanol as a chemical intermediate gives access to aromatics like p-xylene from biomass. The p-xylene can then be oxidized to form terephthalic acid or terephthalate esters.
Increasing consumption of isobutanol in the production of antibiotics, vitamins, and camphor along with the expansion of the medical and healthcare sector across the world is anticipated to fuel the demand for isobutanol over the forecast period.
Furthermore, increased demand for coatings across numerous industries such as building & construction, automotive, wood, and others is predicted to have a significant positive impact on the demand for the global isobutanol market in the upcoming years.
Due to the COVID-19 pandemic, most of the countries have gone under lockdown, due to which operations of various industries such as chemical, and oil & gas has been negatively affected, which is hampering the isobutanol market growth.
Isobutanol Market Segment Analysis – By Application
Synthetic isobutanol held the largest share in the isobutanol market in 2019, owing to the easy availability of synthetic isobutanol. Some thermophilic and hyperthermophilic archaea also have enzymes that provide an alternative pathway from 2-ketoisovalerate (KIV) to isobutanol. However, bio-based isobutanol is expected to witness the highest growth during the forecast period. Growing environmental and toxicity concerns coupled with the cheaper price of bio-based isobutanol may be attributed to product demand. For renewable jet fuels that provide low carbon footprints and cleaner-burning, bio-based isobutanol is widely used. “Farm-to-Fly” is an established initiative that comprises USDA, Airlines for America, and Boeing to promote the production of renewable jet fuels that do not require jet engine modifications and to target the production of 1 billion gallons of drop-in aviation biofuels a year by 2018. The program was extended until 2019 with the addition of DOE, the Department of Transportation (DOT) Federal Aviation Administration (FAA), and major private partners such as the Commercial Aviation Alternative Fuels Initiative (CAAFI). Such government initiatives are boosting the bio-based isobutanol market growth during the forecast period.
Isobutanol Market Segment Analysis – By End-Use Industry
The chemical intermediate segment held the largest share in the isobutanol market in 2019 and is growing at a CAGR of 4.96%, owing to the increasing demand for isobutanol for the production of chemical intermediates such as isobutyl acetate. Also, isobutanol synthesis provides a potential route to methyl tertiary butyl ether (MTBE) via isobutanol dehydration. The demand for isobutyl acetate is growing, owing to its acceptance in the various consumer product industries, such as the food processing industry and lacquer. In recent years the demand for isobutyl acetate from the paint and coating industries has also increased due to the strict regulation on the production of environmentally friendly paint and coating, mainly in western countries such as the “National Volatile Organic Compound Emission Standards for Architectural Coatings” and “National Volatile Organic Compound Emission Standards for Automobile Refinish Coatings” approved by EPA. The rising demand for isobutyl acetate is projected to eventually drive the isobutanol market during the forecast period.
Isobutanol Market Segment Analysis – By Geography
Asia Pacific region held the largest share in the isobutanol market in 2019 up to 42%, owing to the increasing chemical, and oil & gas industries in the region. The increasing population and per capita income are increasing the chemical and oil & gas industry in the region. According to the European Chemical Industry Council or Cefic, China was the world’s largest chemical producer with EUR 1.198 billion in 2018, contributing 35.8 percent of global chemical sales in 2018. The BRIC countries (Brazil, Russia, India, and China) accounted for 42.8% of global chemical sales in 2018. Six countries out of the top 10 biggest producers are Asian generating chemical sales of €1,886 billion – 51.5% of the world market. China’s sales levels are higher than the EU and US markets combined (€1,198 billion compared to €565 bn + €468 bn). According to the International Association of Oil & Gas Producers (IOGP), in 2018, Asia Pacific produced 7.6 million barrels of oil per day, 8% of the world’s total. China was the region’s largest producer, accounting for half of its oil. Other important Asia Pacific producers were India and Indonesia with a share of 11% each, Malaysia with 9%, Thailand with 6%, Australia with 5%, and Vietnam with 4%. Thus, with the flourishing chemical, and oil & gas industry there will be an upsurge in the demand for isobutanol, which is anticipated to drive the isobutanol market in the Asia Pacific region.
Isobutanol Market Drivers
Increase in Automotive Production
Isobutanol has a wide set of applications in automobiles, including usage in anti-wear and anti-corrosion engine oils and polishing and cleaning of automobile parts. Owing to rising per capita income in developing economies, the demand for automobiles is on a rise, which is expected to increase the demand for isobutanol in the automotive market. According to the International Trade Administration (ITA), China is the world’s largest vehicle market and the Chinese government is expecting that automobile production will reach 30 million units by 2020 and 35 million by 2025. According to the China Association of Automobile Manufacturers, in 2018 over 27 million vehicles were sold. According to the International Trade Administration (ITA), in 2017 a total of 1.2 million new passenger vehicles, SUVs, and commercial vehicles were sold in the Australian market, an increase of 0.9% from 2016. Also, according to OICA, the production of light commercial vehicles has increased by 10.2 % in 2018 in the APAC region. Thus, the increasing automation production will require more isobutanol which will act as a driver for the isobutanol market.
Increasing Construction Activities
Isobutanol is one of the key constituents of coatings and solvents used across several applications in the building and construction industry. The building and construction activities are expanding at a lucrative rate across the world due to the increasing population and rising per capita income of the individuals. With the flourishing building and construction industry, the demand for isobutanol is on an upsurge. According to the US Census Bureau, in February 2020 total construction of the United State was at a seasonally adjusted annual rate of 1,366,697 which is 6.0 percent above the February 2019 rate of 1,288,951. According to the European Commission, the total construction investment in Germany increased by 9.5% over 2008-2015. Also, the European Construction 2020 Action Plan aimed at stimulating favorable investment conditions. According to the International Trade Administration (ITA), the Chinese construction industry is forecasted to grow at an annual average of 5% in real terms between 2019 and 2023. The building and construction activities are also increasing owing to the various government initiatives such as Foreign Direct Investments (FDI). Such initiatives are leading to increased building and construction activities in various regions, which act as a driver for the isobutanol market during the forecast period.
Isobutanol Market Challenges
High Cost of Raw Materials Because of Volatility In Crude Oil Prices
Isobutanol is generally produced industrially via carbonylation (incorporation of carbon monoxide into organic compounds) of propylene. The raw materials often used for manufacturing isobutanol such as polypropylene is derived from crude oil. So, the price fluctuation of crude oil hinders the price of isobutanol raw materials. According to, BP Statistical Review of World Energy, In the recent year there is been an increase in the price volatility of crude oil, such as the crude oil price decreased from $98.95 in 2014 to $52.39 in 2015 and increased from $43.73 in 2016 to $71.31 in 2018. And because of this uncertainty in crude oil prices, the price of isobutanol also increases. Thus, the volatility in crude oil prices is expected to be a significant challenge for isobutanol market manufacturers during the forecast period.
Covid-19 Impact on The Isobutanol Market
Due to the Covid-19 outbreak, the isobutanol end-use industries are facing issues such as delays in receiving surfactants from the manufacturers due to the restriction on import and export of materials. There are delays in receiving raw materials, which is further resulting in delayed shipments to the customer. Also, the shipment orders are being heavily affected due to the non-availability of vessels and blank sailing. Moreover, the COVID-19 pandemic is having a huge impact on the automotive and construction industry. The production of automotive has been disruptively stopped, contributing to a major loss in the total automotive sectors. With the decrease in automotive production, the demand for paint and coatings has significantly fallen, which is having a major impact on the isobutanol market.
Isobutanol Market Landscape
Technology launches, acquisitions, and R&D activities are key strategies adopted by players in the isobutanol market. In 2019, the market of isobutanol has been consolidated by the top five players accounting for xx% of the share. Major players in the isobutanol market are BASF, The Dow Chemical Company, Eastman Chemical Company, Toray, Fitesa, Formosa Plastics Corp., Oxea GmbH, Mitsubishi Chemical Corporation, Perstorp Holding AB, and Sasol Ltd.