Isobutanol Prices Explained

Isobutanol prices posted varied trends across regional markets as supply and demand dynamics fluctuated differently. Across all 3 regions, demand from the paints, coatings, and plasticizer industries was weak.

The Asian market rebounded slightly after the closure of Shandong’s plant for maintenance. However, after it resumed operations, supply increased and pushed prices down by 2%, reversing the slight gains. 

While inquiries from the downstream isobutyl acrylate and isobutyl acetate provided support to its prices, the prolonged downturn of construction activities made the European isobutanol quiet. As a result, suppliers are pessimistic of its market outlook and buyers adopted a disciplined purchasing strategy to avoid bulk inventory. This caused the commodity’s price to decline sharply by 8.4%.

Lower production and improved domestic and international demand dominated the U.S. market. Isobutanol prices recovered by 5% as sales in the automotive industry recovered and purchases from Turkey increased. 

The Association of American Railroads reported an increase in chemical railcar loadings which helped the country’s export capacities. This translated to reduced inventories worsened by lower U.S. refinery rates that declined to 90.2%.

Why are isobutanol prices fluctuating?

1. Fuel Replacement

Studies show that isobutanol is a good gasoline blending component (better than ethanol) due to its higher heating value, lower volatility, and less corrosive properties.

Butamax Advanced Biofuels, LLC (isobutanol manufacturer) applied for the registration of isobutanol as a gasoline additive at up to 16% volume.

Presently, it’s used in the oil industry to produce butyl acrylate and butyl acetate (important chemicals in making coatings, adhesives, and plastics). If this application is granted, oil manufacturers will have diverse blending options (reducing traditional fuel production and contributing to its market’s growth).

2. Synthetic Isobutanol

Synthetic isobutanol is the primary source of isobutanol production, accounting for a large share of the overall market (56.4%). Its extensive application across several industries and well-established manufacturing procedures cemented its market supremacy.

The chemical, automotive, and paint and coating sectors rely on synthetic isobutanol because of its consistent availability and quality. Thus, this extensive application influences its market prices.

3. Chemical and Textile Sectors

The global isobutanol market is divided into pharmaceuticals, chemical and textile, paint and coating, and oil and gas. Among these segments, chemical and textile are expected to share the most market.

The commodity is widely used as a chemical intermediate and solvent in the production of isobutyl acetate and isobutyl methacrylate. Also, it is a solubilizer in the textile industry. Its versatility and relevance in these sectors forecasted a CAGR of 6.04% in 2030.

4. Bio-based Isobutanol

While conventional isobutanol has the largest revenue share, the growth track for bio-based isobutanol is predicted to accelerate as the global market shifts toward more eco-friendly solutions.

Experts projected that it would register the fastest compound annual growth rate as the North American oil industries increasingly align their energy-sourcing activities to reduce carbon footprints.

Also, the Green Revolution initiative made bio-based isobutanol increasingly popular as a solvent and intermediate chemical in the production of coatings, plastics, and adhesives. Thus, this segmented application impacts the fluctuating isobutanol prices.

Which variables impact the price of isobutanol?

• Fuel Replacement
• Synthetic Isobutanol
• Chemical and Textile Sectors
• Bio-based Isobutanol
• Alternative Chemicals

Where does isobutanol come from?

Isobutanol is an organic compound from a byproduct of grain fermentation. Its industrial production began with the development of methods to synthesize it from propylene.

These techniques involve the reaction of propylene with carbon monoxide and hydrogen in the presence of catalysts (typically cobalt or rhodium complexes) to produce isobutyraldehyde, which is hydrogenated to isobutanol.

The demand for isobutanol grew due to its applications as a solvent as it’s used to manufacture isobutyl acetate and as a chemical intermediate in several industrial processes.

The United States, China, and Germany are the top producers of isobutanol. These countries have the necessary infrastructure and technological capabilities to produce isobutanol on a large scale.

The U.S. and China posted significant growth in isobutanol production due to the increasing demand for bio-based chemicals and renewable fuels. Also, the production process includes biotechnological methods (the use of genetically engineered yeast to ferment sugars and produce isobutanol), making the process more sustainable and environmentally friendly.

What are the uses of isobutanol?

Isobutanol finds many uses in various sectors and manufacturing processes because of its versatility and adaptability.

1. Solvent – It is used as a solvent to produce lacquers, varnishes, and inks. Its ability to dissolve various substances makes it ideal for these applications, improving the flow and finish of coatings.

2. Plasticizer – Isobutanol is used to manufacture plasticizers, like plastics and rubbers. These materials enhance flexibility and durability, making them more versatile in the packaging and car industries.

3. Fuel Additive – It is a fuel additive for internal combustion engines due to its higher heating value and lower moisture absorption compared to ethanol. Also, it can be blended with gasoline to improve performance and reduce emissions.

4. Chemical Intermediate – It serves as a starting material for the synthesis of numerous chemicals (isobutyl acetate), which is used in the production of lacquers and as a flavoring agent in the food industry.

5. Renewable Resource – Advances in biotechnology enabled the production of isobutanol from biomass, making it a potential biofuel. This method is a good renewable source of energy.

What is the future price of isobutanol?

The growing need in the chemical and gas industries will have a beneficial effect on the isobutanol market. Rapid industrialization from middle-income countries like Brazil, Mexico, and India will lead to increased demand for solvents and coatings that use isobutanol.

The increasing utilization of bio-based isobutanol in the fuel industry will drive opportunities in the global market.

For instance, BP Plc and Dow Inc. have started using isobutanol as a fuel additive due to its ability to enhance octane numbers and reduce emissions. The United States and Germany support and recognize the production and use of this chemical as it’s a sustainable alternative to traditional fossil fuels.

On the restraint side, the volatility of its raw material prices, particularly the cost of petrochemical feedstocks. Any fluctuations in these will result in increased production costs and retail prices. Additionally, strict regulatory requirements aimed at reducing emissions translate to increased compliance costs.

Moreover, the market is constantly challenged by alternative solvents and biofuels that offer more favorable environmental profiles and lower costs. However, present and emerging trends offer a positive future market and isobutanol price will be $3267.17 per ton in 2028.