White pollution is a huge challenge that accompanies the development of human society and economy. Since the 21st century, there has been a global trend of biodegradable plastics, and many countries have issued stricter policies to promote industry development. In January 2020, China officially changed from “plastic restriction” to “plastic ban”, which has driven the biodegradable plastics industry from an early period of sluggish development to a period of rapid development. Due to long-term sluggish development, the current industry competition is relatively chaotic and uncertain. Grasping the core elements may lead to becoming a leading enterprise and leading the golden age.
The introduction of the “plastic ban order” has led to a surge in the biodegradable plastic market
The biodegradable plastic market in China started as early as 2012, but due to low early market demand, high raw material costs, limited production capacity, and slow overall industry development, some companies that entered the market early were even forced to transform due to long-term insufficient orders. Until January 2020, the “Opinions on Further Strengthening the Control of Plastic Pollution” (hereinafter referred to as the “Plastic Ban Order”) was issued, requiring an orderly ban and restriction on the production, sale, and use of some plastic products, actively promoting alternative products, and officially changing from “plastic restriction” to “plastic ban” (see Figure 1).
As a result, the biodegradable plastic market, which serves as a substitute for traditional plastics, has experienced significant growth and a surge in orders. We expect that during the 14th Five Year Plan period, the biodegradable plastic market will grow at a compound annual growth rate of 11.3% and achieve a revenue scale of over 50 billion yuan by 2025 (see Figure 2).
At the same time, the price of biodegradable plastic products has risen in the past year. For example, before the plastic ban, the price of PLA was 20000 yuan/ton, but now the market price in some places has reached as high as 50000 yuan/ton. This directly improved the overall profitability of the industry, with leading companies such as Jinfa Technology and Yifan Pharmaceutical achieving gross profit margins close to 40% in 2019 and 2020, a significant increase compared to 2018 (see Figure 3).
Three Steps into the Biodegradable Plastic Market
1. Early layout
Due to the long-term market downturn, the production capacity growth rate of biodegradable plastics in China has been slow. According to statistics, from 2012 to 2020, the compound annual growth rate of this figure was 9.63%, reaching 480000 tons/year by 2020, and the market demand in the same year was 640000 tons/year, resulting in a large capacity gap (see Figure 4).
At the same time, the production capacity gap among major manufacturers is relatively small, with the top three market share companies, Jinfa Technology, Longdu Tianren Biotechnology, and Yunyoucheng Biotechnology, having production capacities of only 70000 tons/year, 50000 tons/year, and 50000 tons/year, respectively, in 2020. It can be said that whoever can take the lead in completing the production capacity layout is likely to seize the opportunity and gain a larger share, and catching up from behind is not difficult.
5.pngBut ‘time waits for no one’, and the intensification of competition in the future is inevitable. It is reported that various enterprises are actively expanding and planning to add more than 8 million tons/year of production capacity in the next few years (including 3.48 million tons/year for PBAT, 3.46 million tons/year for PLA, and 100000 tons/year for PHA). In 2021-2022 alone, there are as many as 3.7 million tons of new production capacity that have been clearly identified. To solve the problem of funding gap, major manufacturers have also taken multiple measures and demonstrated their own abilities. For example, Changhong High tech announced on May 21, 2021 a plan to issue convertible bonds with a total amount not exceeding 700 million yuan (inclusive), a term of 6 years, and the raised funds are planned to be used for the “600000 ton fully biodegradable thermoplastic industrialization project (Phase I) secondary investment”; Jindan Technology announced a change in its fundraising project in January 2021, taking into account the “plastic ban” policy and the future market situation of biodegradable materials. The company’s management believes it is necessary to expand the originally designed production capacity of 10000 tons of polylactic acid appropriately. Currently, the company’s board of directors is organizing relevant personnel to analyze and demonstrate the feasibility and implementation plan of expanding the investment scale of this project.
2. Focus on key points
According to the 2020 “Plastic Ban Order”, there are four main types of plastic products that are restricted from use: plastic shopping bags, disposable plastic tableware, disposable plastic products for hotels and hotels, and plastic packaging for express delivery. The production and sales of ultra-thin plastic bags and ultra-thin agricultural films are also restricted. At present, the substitution rate of biodegradable plastics in these industries is relatively low, with the highest being 25% in the express delivery industry and the lowest being 3% in the agricultural film industry, both lower than the average substitution rate of 30% in countries such as the United States and the Netherlands (see Figure 6).
In the future, biodegradable plastics are expected to accelerate their promotion and popularization in many fields such as express delivery, food delivery, shopping bags, etc. It is recommended to pay close attention to them.
The popularity of online consumption and the strong demand for replacement of express packaging. The “Express Packaging Products” series of national standards issued in 2018 proposed for the first time that “biodegradable plastics should be used for express packaging”. It is expected that by 2025, the domestic consumption of biodegradable plastics in express delivery will be about 1.52 million tons.
Food delivery is growing rapidly, and there is great potential for the replacement of disposable tableware. In 2017, Meituan Waimai, industry associations, and multiple catering brands jointly initiated the “Green Waimai Industry Convention (Green Ten Articles)”, which estimates that the domestic Waimai industry will consume approximately 460000 tons of biodegradable plastics by 2025.
The demand for shopping bags in some scenarios is stable, and the biodegradable penetration rate urgently needs to be improved. Although the use of plastic shopping bags has significantly decreased since the promotion of the “plastic restriction order” in 2008, due to the retention of basic demand in some scenarios, the usage is difficult to significantly decline. It is expected that the domestic shopping bag industry will consume about 240000 tons of biodegradable plastics by 2025.
Traditional agricultural film pollution is severe, and there is a vast space for industry substitution. Traditional polyethylene film is widely used in China and lacks effective management measures, which has a significant impact on soil and crops. Biodegradable film has good development prospects, but the overall growth rate of the industry is slow, with an expected demand of 150000 tons by 2025.
3. Cost reduction
Non degradable plastics such as PP, PET, PE, etc. have lower prices, while biodegradable plastics have significantly higher prices. Currently, mainstream biodegradable plastics such as PLA, PHA, and PBAT have prices ranging from 16000 to 30000 yuan/ton, 40000 yuan/ton, and 14000 to 25000 yuan/ton, respectively, which are 2-5 times the price of PE. The price of PCL can even reach 70000 yuan/ton, which is 9.5 times the price of PE (see Figure 7).
High raw material prices, low technological levels, and low capacity utilization are the three main reasons for the high prices of biodegradable plastics in China. Taking PLA as an example, although the one-step method has low cost, its quality is poor, while the two-step method has excellent quality and is currently the mainstream synthesis route, but its cost is high, about 2.3 times that of the one-step method. How to achieve high purity and low cost is the key to improving penetration rate and winning market competition. For example, Total Corbion, a joint venture company of NatureWorks in the United States, Total in France, and Corbion in the Netherlands, leads the global market due to its low-cost high-purity preparation process for PLA intermediate – lactide. In 2020, its production capacity share reached 29.04% and 14.52% respectively (Figure 8).
Up close, leading enterprises in China are actively breaking through technological barriers through independent research and development, cooperative research and development, and other means in order to gain cost advantages. For example, Zhejiang Haizheng and Changchun Yinghua jointly developed the technology and process of propylene glycol ester, which has been successfully produced offline and partially self supplied; COFCO Technology and Belgian Grate have jointly established a full industry chain production base for corn lactic acid lactide polylactic acid in Anhui, and have basically mastered the production process and processing technology of lactide. In addition, the Institute of Physics and Chemistry of the Chinese Academy of Sciences has developed a low-cost, high mechanical performance, and good biosafety PBAT production technology. Companies such as Huiying New Materials, Jinhui Zhaolong, and Yuetai Biotechnology have obtained the right to use this technology through authorization, which has also solved the problem of high costs to a certain extent.
Dongguan Liansheng Non woven Technology Co., Ltd. was established in May 2020. It is a large-scale non-woven fabric production enterprise integrating research and development, production, and sales. It can produce various colors of PP spunbond non-woven fabrics with a width of less than 3.2 meters from 9 grams to 300 grams.
Post time: May-21-2025