By Zhai Xiuling, Shandong Longzhong Information Technology Co., Ltd.

The main battlefield lies in China, with the largest apparent consumption of PLA

Driven by various policies at home and abroad, the production capacity of degradable materials has surged rapidly. According to incomplete statistics, as of 2022, China's total production capacity of degradable materials hit 1.2842 million t/a.

At present, the relatively mature products are mainly polybutylene adipate terephthalate (PBAT) and polylactic acid (PLA), followed by polybutylene succinate (PBS). Other products such as polypropylene carbonate (PPC), polyglycolic acid (PGA), polycaprolactone (PCL), polyhydroxyalkanoate (PHA), etc., have sluggish development because of difficult industrial production and inactive market circulation. Currently, China's PBAT production capacity is 826 000 t/a, accounting for 63.4% of global capacity; PLA is 200 000 t/a, accounting for 15.3%. See Figure 1 for details. (The statistics only include those which have reached effective mass production, and those which did not reach effective mass production have not yet been counted. The production capacity of Changchun Group in Taiwan, China is counted in domestic.)

Figure 1 Statistics of global degradable materials production capacity in 2022

According to statistics, in 2022, China's output of degradation products was about 220 000 tons. Among them, the output of PBAT was about 140 000 tons, mainly produced by Kingfa Sci. & Tech. Co., Ltd., Xinjiang Blue Ridge Tunhe Sci. & Tech. Co., Ltd., etc., accounting for about 65% of the total output; followed by PLA, with an output of about 60 000 tons, mainly produced by Zhejiang Hisun Biomaterials Co., Ltd. and Anhui BBCA Biochemical Co., Ltd., accounting for 29% of the total output; PBS accounted for about 4.0%, and the main manufactures were Xinjiang Blue Ridge Tunhe Sci. & Tech. Co., Ltd., KingfaSci. & Tech. Co., Ltd., Anhui Sealong Biotechnology Co., Ltd., etc. The output of other products accounted for 2.1%. See Figure 2 for details.

Figure 2 Statistics of China's output of degradable materials in 2022

In 2022, the apparent consumption of major degradation products in China was around 150 000 tons. Among them, PLA products topped the apparent consumption, around 70 000 tons. PLA products had relatively large import volume, namely 19 563 tons in 2022, and mainly came from Thailand and the United States. The import volume from the two countries accounted for nearly 94% of the total. The export volume of PLA was 7 980 tons, and the export trading partners were mainly South Korea, Taiwan of China, Italy, Japan and other countries and regions. The export volume to the above four regions accounted for more than 88% of the total export. Exports were mainly from Jiangsu and Zhejiang provinces, followed by Anhui and Guangdong provinces. In 2022, the net import of PLA was 11 583 tons. Followed by PBAT products, the apparent consumption was about 60 000 tons. The export volume of PBAT products accounted for more than half of the total output, ranging from 60 000 to 70 000 tons, while the import volume was only a few thousand tons.

PLA in China had relatively high apparent consumption, mainly because the market consumption structure is more diversified, and it can be processed through extrusion, stretching, spinning, film blowing, injection molding, blow molding, blister molding and other molding processes, and its application is relatively comprehensive. PLA is mainly used in straws, tableware, 3D printing, coating, packaging bags, plastic film, fiber and other fields. In addition, there are also related research and applications in medical, toys, toothbrushes, packaging films and other products.

The downstream applications of PBAT are mainly disposable degradable film bags and degradable mulch films; the downstream consumption of PBS is mainly straws and tableware where PBS is blended with PLA products and mainly uses as additive, so the demand is relatively small.

Prices fall as supply rises

From 2018 to 2022, the average annual price of China's PBAT market ranged between RMB14 000 to RMB24 000 per ton. The market price dropped to a low of RMB13 000 per ton in December 2019 and surged to a high of RMB31 548 per ton in March 2021. From 2018 to 2019, China’s PBAT price showed a fluctuating and falling trend. Especially in 2019, affected by the increase in supply, the market competition intensified, and then the domestic price plummeted to RMB13 000 per ton.

In 2022, amidst the economic slowdown and less-than-expected promotion of plastic restriction policy, China’s PBAT price showed a downward trend and averaged at RMB18 924 per ton, a sharp plunge of 21.22% year-on-year. However, from the perspective of supply and demand, the supply side has declined throughout the year, and demand has not recovered satisfactorily. In the first half of the year, it maintained a state of destocking and in the second half, the cost side collapsed, the supply inched up. While people were pessimistic about the market, China’s PBTA price was falling down accordingly and the spot price plummeted to RMB13 000 to RMB13 500 per ton at the end of the year.

From 2018 to 2022, annual price of China’s PLA market averaged between RMB15 000 to RMB25 000 per ton; in 2018 to 2019, both the supply and demand of PLA were weak, and the price ranged between RMB15 000 to RMB18 000 per ton. In 2020, driven by the domestic "Plastic Restriction Order" policy and the impact of lactide shortage, the supply and demand of PLA tightened, and the price rose significantly. The average price hovered around RMB25 000 per ton, an increase of 38.55%. In 2021, due to the Covid-19 pandemic, the shipping price skyrocketed, affecting the demand side, and the PLA price dropped as well. In 2022, due to the severe domestic pandemic situation and no obvious improvement in demand, prices continued to decline. At the end of 2022, the PLA price dropped to about RMB23 000 per ton.

Substitution of degradable plastic products to traditional plastics

According to the research on the downstream application of various degradable products, the annual substitution of degradable plastic products to traditional plastics is about 240 000 tons. Among them, the substitution volume to PE products is about 140 000 tons, mainly used in biodegradable vest bags (supermarket shopping bags, milk tea bags, takeaway packaging bags, etc.), other packaging bags (flat bags, garbage bags, etc.) and agricultural mulching films, etc. The substitution rate of PE low pressure film is 2%~3%. PBAT, with good ductility, elongation at break, heat resistance, impact performance, and excellent biodegradability, becomes the main material for substitution.

The substitution of degraded products to traditional PP, PET, engineering plastics and fibers is about 100 000 tons, and the main substitutes are PLA raw materials. According to market research, PLA is mainly used in straws, tableware, 3D printing, coating, packaging bags, plastic film, fiber, etc. There are also related research and applications in medical treatment, toys, toothbrushes, and packaging films. According to research, the total domestic demand for straws is about 95 000 tons, of which PLA straws are about 20 000 tons, and the substitution rate is about 18%.

The industry has good prospects for future growth

In recent years, a large number of domestic planned production capacity of degradation products such as PBAT and PLA have been put into operation one after another, some of which are equipped with upstream and downstream units. Although the supply and demand pattern is constantly changing, the production capacity of China's degradation industry still maintains a rapid growth trend. At present, the promotion of the plastic restriction policy is not favorable. It is expected that the demand of the degradable industry will gradually recover in 2023, and there is a good growth trend in the demand of degradable express bags, degradable woven bags, and degradable plastic films.

In the next five years, with the implementation of relevant policies and the improvement of the system, the prices of degradable products such as PBAT and PLA will fall back to a reasonable range, and the international demand will have sustainable growth. In addition, the degradable products will become much more diversified and the application fields will be more extensive. With the continuous advancement of environmental protection policies and the guidance of the "double carbon" policy, the degradable plastics industry has good prospects for future growth in the later stage. In order to achieve the "double carbon" goal, environmental protection products will have more advantages in the future. In view of the fact that PLA is a bio-based product, and its carbon footprint is significantly lower than that of traditional plastics, it is suggested that the development of PLA should be low-carbon, environmentally friendly, and product diversification.

It is estimated that in 2026, the production capacity of China's degradation industry will be up to 7 million t/a, and the output will reach nearly 1.6 million t/a, with a compound annual growth rate of about 140%. It is estimated that the price of PBAT will be RMB10 000 to RMB13 000 per ton in 2023-2026, and the price of PLA is expected to be RMB18 000 to RMB23 000 per ton. The price forecast of PBTA and PLA degradation products is shown in Figure 3.

Figure 3 Price forecast of PBTA and PLA degradation products in China