Bioplastics still to be niche market

Keyword: niche market, high prices, glassine membrane, bioplastics
Publish time: 17th November, 2014      Source: CCM
Information collection and data processing:  CCM     For more information, please contact us

There are major concerns about how petro-based plastics fail to decompose in the ocean and end up in the human food chain through fish consumption. Comparatively, bio-based products, which are biocompatible and eco-friendly, are capturing public attention. However, bioplastics is expected to remain a niche market due to its high prices. 

On 28 Aug., 2014, the Scientific American published issue 9 in 2014 (Chinese version), in which an article, The Case for Inheritance of Epigenetic Changes in Chromosomes (written by Michael K. Skinner) mentioned that the pollutants including petro-based plastics will bring health risks to the next generations through inheritance.

Besides, Professor Carlos M. Duarte, director of the Oceans Institute at the University of Western Australia who carries out related research on where ocean plastics go, stated in theProceedings of the National Academy of Sciences of the United States of America in mid-Aug., that most of the petro-based plastics in the ocean do not decompose, and instead they are eaten by fish and eventually enter into the food chain of humans.

This draws wide social attention to the harm caused by petro-based plastics. Meantime, due to the improving safety consciousness and the widespread concept of biodegradability, many market research institutes are positive towards the prospects of bioplastics. For instance, the US-based McKinsey & Company released a positive prediction on the bioplastic market.

The concept of bioplastics isn't new. At the end of 19th century, the glassine membrane made from plant cellulose showed up in the market. In 1940s, Ford Motor Company applied soybean-based bioplastics in some auto parts.

However, in the past 25 years, there has been a big gap between capability to produce bioplastics and profitability in producing bioplastics. Excellent fermentation strains were successfully cultivated. For example, the Tianjin Institute of Industrial Biotechnology, Chinese Academy of Sciences established a microbial cell plant to efficiently transform biomass into succinic acid, so as to further reduce the production costs of polybutylenes succinate (PBS). Nevertheless, it was just a flash in the market. Other research or technology to develop bioplastics suffered a similar fate, almost all of which were not put into commercial production. Conclusively, bioplastics have not been given full play yet.

High price is a dominant factor drawing back the development of bioplastics. In early 2014, a research company, the US-based The Freedonia Group released a market report, stating that bioplastics will only achieve large-scale application when the prices of bioplastics can be the same with that of traditional petro-based plastics. Although the increasing petroleum price has driven up the price of petroleum resin in recent years, it has not given rise to favorable conditions for bioplastics. Bioplastics still only occupies 1% market share of the global total.

Meanwhile, there is no sign that bioplastics will increase its market share in the near future. This is because in the following years, the supply of low-priced shale gas will partly substitute the consumption of petroleum to produce petro-based plastics. Also, if the capacity of new petroleum resin can be relieved continuously, the prices of standard petroleum resin are expected to fall, which will enlarge the price gap between petro-based plastics and bioplastics. In summary, bioplastics is struggling to survive in such intense competition.

Limited by high prices, bioplastics will continue to be a niche market. There are some successful cases, though they are also confronted with difficulties. Guangzhou Kingfa Sci & Tech Co., Ltd. (Kingfa), a widely recognized bioplastic leading enterprise in China, recorded a revenue of USD2.34 billion (RMB14.43 billion) in 2013, with a high YoY growth rate of up to nearly 18% (USD1.98 billion – RMB12.24 billion in 2012). However, Yuan Zhimin, chairman of Kingfa and deputy to the 2014 National People's Congress and the 2014 Chinese People's Political Consultative Conference, pointed out in the above two conferences that there are many problems existing in the promotion of bioplastics, and expected the government to focus on and support bioplastics.

There have been many failures. In June 2014, Inner Mongolia Mengxi High-Tech Group Co., Ltd. (Mengxi Group) announced its withdrawal from the production of poly propylene carbonate (PPC) plastics, owing to the high prices and difficulties with promotion.

Regarding the foreign enterprises, the US-based NatureWorks LLC (NatureWorks), a world leader in bioplastics, sold about 450,000 tonnes of bioplastic (Ingeo) in 2013. In the industry meeting held in Feb. 2014, Marc Verbruggen, CEO of NatureWorks, admitted that the sales volume in 2013 was a conservative evaluation, and that there was a long way to go for global bioplastic market to succeed.

Bioplastics has the potential to become a mainstream market:

- Petroleum reserves are decreasing. Petroleum giants like the US-based Exxon Mobil Corporation and the France-based TOTAL Corporate are gradually lowering their output of petroleum. Also, the price of crude oil is rising.

- Global warming, pollution and environmental damage are major concerns worldwide.

- The EU is determined to completely ban the use of petro-based packaging products by 2019. 

- Leading enterprises are participating in the development of bioplastics. The US-based Target Corp., and the US-based Procter & Gamble are applying bioplastics in some fields; the US-based Wal-Mart Stores Inc. has set up a goal to achieve zero landfill.

However, it is more likely that bioplastics will remain a niche market.



Normal 0 7.8 磅 0 2 false false false EN-US ZH-CN X-NONE