Once the leader has an accident, the market will inevitably be turbulent. Recently, the world's No. 1 adiponitrile plant jointly held by BASF, INVISTA, and DOMO suddenly exploded. Is this industry chain going to rise again?
The storage pit exploded! The world's largest factory shutdown or extension?
According to reports from French media, an explosion occurred at the Butachimie factory in Chalape, resulting in injuries to five individuals. The explosion originated from the storage pit of the production plant, triggering widespread attention within the industry. It is important to note that while the accident did not cause equipment damage or leaks, the factory had already been shut down for maintenance since May 19, with plans for a restart in early July. The explosion may potentially extend the repair time, further impacting the market and creating fluctuations.
The Importance of Adiponitrile:
Adiponitrile is a significant organic compound with diverse applications. It exhibits slight solubility in water but dissolves well in ethanol and chloroform. This compound finds extensive use in detergent additives, analytical reagents/solvents, gas chromatography stationary liquids, and as an intermediate for nylon 66's key component, hexamethylenediamine. Hexamethylenediamine, in turn, accounts for more than 90% of adiponitrile's output and contributes 40%-50% to the cost of producing nylon 66.
Nylon 66 and Its Wide Range of Applications:
Nylon 66 plays a crucial role in emerging industries due to its exceptional mechanical strength, fatigue resistance, wear resistance, corrosion resistance, insulation, fiber elasticity, and low density. It finds extensive utilization in national defense, military, urban construction, transportation, and daily life sectors. Industries such as automotive lightweighting, electronics, rail transit, engineering plastics, and agriculture benefit from nylon 66's superior characteristics. As the concept of green and low-carbon development gains prominence, the demand for nylon 66 continues to grow. Its temperature and chemical resistance facilitate vehicle weight reduction, improved performance, reduced carbon dioxide emissions, and mitigation of vibration and noise issues, ultimately leading to reduced maintenance.
The Impact of the Butachimie Factory Explosion:
With the majority of adiponitrile supply currently concentrated in the hands of the world's top four manufacturers, any disruptions or production reductions can severely impact the nylon 66 supply chain. Limited supply and increased costs have already led to price hikes in related products, impeding the development of domestic automotive, electronics, and electrical sectors.
The Chinese Adiponitrile Scenario:
China heavily relies on imports for adiponitrile supply, making it challenging to disrupt the dominance of the four major global manufacturers. However, to reduce dependence and stimulate domestic nylon 66 production capacity, China has been gradually developing adiponitrile production technology since 2020. Although breakthroughs have been made in domestic technology and adiponitrile production capacity reached 100,000 tons in 2021, it still falls short of market demand. Hexamethylenediamine production, which relies on adiponitrile as a raw material, faces high production technical barriers and supply monopolies controlled by a few foreign-funded enterprises.
Future Outlook:
While China's domestic production technology is currently facing obstacles, there is ample room for optimization, and several industry giants are actively entering the market. Foreign companies like BASF are expanding their hexamethylenediamine and nylon 66 production
The recent explosion at the Butachimie factory has undoubtedly shaken the adiponitrile industry, raising concerns about the stability of the supply chain. As the industry grapples with the consequences of the incident, it is crucial to monitor the recovery of the affected plant and the subsequent impact on market sentiment. Adiponitrile's significance in the production of nylon 66, a key material in various industries, underscores the importance of a stable and efficient supply chain. With ongoing developments in technology and efforts to break import dependence, the future of the adiponitrile industry holds potential for growth, presenting exciting opportunities for all stakeholders involved.
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