European Bioplastics: Global Bioplastics Industry Poised for Major Expansion and Innovation

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Researched by Industrial Info Resources (Sugar Land, Texas)--The global bioplastics industry is at the beginning of a major phase of production expansion and commercial product innovation. European Bioplastics (Berlin) reports that global production will quadruple from 300,000 tons to more than 1 million tons per year by 2011.

European Bioplastics has commissioned a study to analyze the potential for bioplastics to be published at the end of 2008 and has predicted that the European market for bioplastics could reach 5 million tons by 2020. Currently, bioplastics production represents 0.25% of the world's plastics production at about 200 million tons per year.

In the past year, many companies in the sector have announced production expansion plans and investments being made across all product areas. These products include compostable bioplastics, such as starch blends, polylactic acid and new polyesters like polyhydroxy acid. All of these will become commercially available at the end of 2008.

Solvay Indupa (Buenos Aires, Argentina) has invested $135 million into expansions at its Santo Andre plant in Brazil to become the first industrial project in the Americas producing PVC out of ethylene from a sugar-cane-based ethanol feed. After the expansion is complete, the plant is expected to have a capacity of 360,000 tons per year of PVC; 360,000 tons per year of vinyl chloride monomer; 235,000 tons per year of caustic soda; and 60,000 tons per year of bioethylene. The Dow Chemical Company (NYSE:DOW) (Midland, Michigan) and Crystalsev, one Brazil's largest ethanol producers, are planning to produce 350,000 tons per year of polyethylene from sugar-cane ethanol starting in 2011, using Dow's proprietary technology DOWLEXT.

High growth rates are anticipated over a range of applications or product segments, according to European Bioplastics. Compostable waste bags and carrier bags reduce landfill. Once used, biodegradable mulch film can be ploughed, reducing labor and disposal cost. Catering products and service packaging can be composted, along with remaining food scraps. Film packaging can be composted with spoiled foodstuffs. Rigid packaging, such as containers and bottles, are compostable.

Although packaging made of bioplastics can cost 50% to 100% more than conventional products, its inherent green appeal, savings and the supply chain in the life of products is attracting support. Major companies are moving into the sector, including the Asian conglomerate Charoen Pokphand Group (HKG:0043) (Bangkok, Thailand), which is studying the possibility of investing $60 million to upgrade its bioplastics business in Thailand with U.S. partner NatureWorks LLC (Minnetonka, Minnesota). The latter was formed in 2007 as a joint venture between global food and agriculture major Cargill (Minneapolis, Minnesota) and Teijin Limited (TYO:3401) (Tokyo). The joint venture plans to produce 24,000 tons per year of polylactic acid for domestic use instead of importing it. Currently, the petrochemical arm of Charoen Pokphand buys polylactic acid from NatureWorks and Metabolix (NASDAQ:MBLX) (Cambridge, Massachusetts). Both Nature Works, using corn-based biodiesel byproducts, and Metabolix, co-producing oil-based biodiesel and bioplastic feeds, are developing new biodegradable plastics products from renewable sources, including polyethylene.

NatureWorks, the world's leading polylactic acid supplier, would provide technology to produce corn-based polylactic acid, and Charoen Pokphand would contribute its expertise in farm crops. In Vietnam, Japanese companies Hitachi Zosen Corporation (TYO:7004) (Osaka) and CPR Corporation, in a similar setup, have invested in PLA production in Vietnam using cassava as the raw material. This project is expected to go into production by the end of 2008.

In Thailand, Charoen Pokphand Group will devote 5% of its total capacity to bioplastics in 2009 with an annual volume of 1,000 tons. The company is seeking government support through incentives for green packaging production by waiving the current 5% import tax on polylactic acid compounds. The company believes that environment-related taxes should be considered to encourage demand by consumers.

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