Sun Nan, China National Chemical Information Center Consulting Department
China’s biodegradable plastics market situation
China has implemented its plastic pollution control policies and hence started a new history for biodegradable plastics. In 2007, the government issued the first "plastic restriction" regulation policy: "Notice on Restricting the Production, Sales and Use of Plastic Shopping Bags". On January 19, 2020, the National Development and Reform Commission and the Ministry of Ecology and Environment jointly released "Opinions on Further Strengthening Plastic Pollution Control", stating a three-step goal and a timetable for plastic pollution control. Since then, local governments across the country started to launch plans on plastic pollution control. By November 2020, all provinces, municipalities and autonomous regions of China have had their own action plans. For instance, Hainan Province issued " Regulations on Banning Disposable Non-Degradable Plastic Products in Hainan Special Economic Zone", completely prohibiting the production, sale and use of disposable non-degradable plastic bags and plastic dining utensils on Hainan Island.
There are many players in China’s biodegradable industry chain with complete supporting facilities. Being a late comer, this industry, thanks to 20 years’ development and “plastics restriction” policies, has already been equipped with a mature system and a supply-demand basis.
Chart 1 shows that China’s biodegradable plastics industry chain, being government-centric, covers third-party institutions such as scientific research institutions, investment institutions, industry associations; and raw material producers, resin enterprises, finished product companies and downstream factories. It complements traditional plastic enterprises and has hence become a solid foundation of China’s biodegradable plastics.
Chart 1 China’s biodegradable plastics industry chain
1. PLA production
Being the major biodegradable plastics present and future, China’s PLA industry chain is becoming mature. It is more suitable in sectors with higher food safety and hygiene standards, compared with other biodegradable materials. The market future is bright.
Chart 2 shows PLA capacities and outputs from 2015 to 2025. We can see that the annual growths of PLA capacity in past five years have exceeded 40%, and a PLA industry chain has formed, represented by Zhejiang Hisun, Anhui BBCA and Jindan Technology.
Chart 2 China’s PLA capacities and outputs, 2015 to 2025
Table 1 covers China’s major PLA producers. Hisun and BBCA, having completely mastered PLA production routes, are able to guarantee mass production. While Jindan Technology and Jinfa Technology have finished their initial layout of PLA.
By May 2021, the market has seen over 3 million t/a new PLA capacities, with 50% of current capacities and 57% of expansions (including those planned) concentrated in East China.
2. PBAT production
Thanks to its raw material cost advantage and better biodegradability, PBAT has become the most popular biodegradable material. Chart 3 illustrates the PBAT industry chain in China, with a mature upstream and a huge downstream market. The significant expansion of the capacity will push it to be one of the major biodegradable plastics in the future.
Chart 3 China’s PBAT industry chain
Based on ample raw material supplies and mature PBAT production processes, China has become the world's largest PBAT producer and will see a rapid expansion of the production scale in the future. Chart 4 shows the historical data and forecast of PBAT capacities and outputs in China from 2015 to 2025.
Chart 4 China’s PBAT capacities and outputs, 2015-2025
China started the research on polyester biodegradable plastics in 1999. Its first 1 000t/a production line was completed in 2007. After years of development, domestic units all have been equipped with flexible design of aliphatic degradable polyesters, and the switch between biodegradable polyesters and co-polyesters such as PBAT, PBS, PBST and PBSA. Table 2 presents China’s major PBAT producers and their capacities in 2020, with the total figure hitting 330 000 t/a. Among well-known manufacturers are Blue Ridge Tunhe, Jinfa Technology and Shandong Huiying.
Besides these producers, there are many other companies considering enter this sector. The total new capacities (including those being planned) has reached 15 million t/a by June 2021.
As a petrochemical-based biodegradable material, PBAT’s prices follow the trends of oil prices. Its processing cost remains high due to the small-sized production, which, however, will reduce as the scale expands. The current production cost of is about RMB 8 500/ton. And the prices, influenced by the plastic restriction policies, has increased from RMB18 000 /ton in 2017 to RMB35 000 /ton maximum.
The cost and prices of PBAT in China are expected to drop to RMB10 000 – 12 000/ton in the long term.
3. Downstream applications of biodegradable plastics
China is among the world tops in terms of biodegradable plastics’ capacities, with rapidly developing PLA and PBAT and a complete product series, starch-based plastics, PLA, PBAT and PBS.
China’s biodegradable plastics are mainly applied to packaging & fast food boxes, medical, and agricultural films. With packaging & fast food boxes being the biggest consumer, accounting for 77% of the total.
Chart 5 illustrates China’s biodegradable plastics capacities and consumptions. Packaging and food boxes, as the biggest downstream users, usually consume PP and PE. However, PLA and PBAT are already ready to substitute them in a large scale. With the promotion of plastic restriction policies, biodegradable plastics will largely replace non-biodegradable plastics in this sectorin the next five years.
Chart 5 China’s biodegradable plastics capacities and consumptions, 2020
4. Future biodegradable plastics market calculation
With the rapid development of e-commerce and takeout foods, the market demand for plastic packaging is rising rapidly, especially during COVID-19 period. It is expected that the demand for biodegradable plastics will be one million tons.
Chart 6 shows that the future market volume of biodegradable plastics is expected to reach 7.78 million tons and RMB155.5 billion by 2025, becoming a super large niche market.
Chart 6 Future market volume of biodegradable plastics
According to the expansions known, the total capacity of biodegradable materials in China will reach 20.3 million t/a by 2025, leading to an oversupply hence. If 80% of all planned constructions are completed, the total capacity of biodegradable plastics in China will be 16.24 million t/a by 2025, reducing the industry’s operating rate to 48% then.
Opportunities and challenges of biodegradable plastics
1. Regulations and policies need to be further improved
There are not enough detailed policies to support biodegradable material producers. Hence, governments and relevant departments at all levels need to improve the relevant systems to better protect the interests of the enterprises.
The testing methods and standards shall be improved to guarantee the healthy development of the industry and to avoid chaos existing presently due to the lack of authoritative definition of degradation and updating.
2. Recovery and disposal system need to be perfected
It is necessary to further improve the waste sorting system to better recycle and utilize biodegradable plastics. Supports should be given to special composting and treatment facilities so that a complete biodegradable plastic recycling chain can be formed as soon as possible.
3. Cost of biodegradable materials need to be reduced
The cost of biodegradable plastics is still higher than that of traditional plastics. Industry players need to continuously increase production efficiency, enhance production technology, thereby reduce costs, and improve the profitability.
4. Biodegradable plastics complement polyethylene and polypropylene
The gap between biodegradable plastics and traditional plastics in terms of performance restricts the application of biodegradable plastics in areas other than films and fibers. Without policy support, biodegradable plastics will not be able to compete with traditional plastics in other fields.
