Bioplastic industry remains strong despite recession

Durability under pressure

22 March 2010 00:00  [Source: ICB]

Correction: In the article headlined "Bioplastic industry remains strong despite recession," in the 26th paragraph, please read: "The 110m lb/year facility, which will produce PHA-based polymers under the brand Mirel, finally started operations in December 2009," instead of: "The 110m lb/year facility, which will produce PHA-based polymers under the brand Mirel, finally started operations in March." A corrected story follows.

The recession has molded the bioplastics industry into a stronger contender

THE GLOBAL bioplastics industry has proven its flexibility in navigating the recession, as companies restructured, delayed projects or significantly cut costs.

A big accomplishment for the industry last year was that not one major player filed for bankruptcy or completely disappeared, notes Frederic Scheer, chairman and CEO of US-based bioplastic maker Cereplast.

"There were a lot of business activities that still happened last year for our industry, which is remarkable at a time when the chemical industry in general and the plastic market in particular were suffering tremendously from the recession," he says.

Germany-based trade group European Bioplastics pointed out some of the major activities in 2009, such as US producer NatureWorks doubling its polylactic acid (PLA) production capacity to 140,000 tonnes/year; German chemical major BASF introducing new biodegradable plastics for coating paper and shrink film; and Italy-based Novamont launching its second-generation bioplastic Mater-Bi, as well as boosting capacity to 80,000 tonnes/year.

A bioplastics study by Netherlands-based Utrecht University, which was jointly commissioned by European Bioplastics and research body the European Polysaccharide Network of Excellence, and published in June 2009, projected global bioplastic capacity to increase to 2.3m tonnes by 2013 from around 360,000 tonnes in 2007, based on company announcements.

"Important major projects were delayed in 2008 and 2009 due to the financial and economic crisis," said Hasso von Pogrell, managing director of European Bioplastics, in a statement. "Despite the still uncertain data, the study shows the enormous potential for bioplastics."

US market research firm Freedonia released its global ­bioplastic study in November, projecting that global demand in 2013 would increase to 900,000 tonnes from the 200,000 tonne estimated level in 2008. Jim Lunt, managing director for US consulting firm Jim Lunt & Associates estimates the current global production capacity for bioplastics at 300,000 tonnes.

"The bioplastic industry definitely did not grow as much as expected last year because of the economy," notes Lunt. "Many bioplastic customers who were going to switch last year delayed their plans, while capacity plans such as Metabolix's polyhydroxyalkanoate (PHA) plant and, Dow Chemical's bio-polyethylene project, and those from several European bioplastic producers have been delayed as well."

Novamont noted a drop in demand for bioplastics in the first half of 2009 - from its European and US customers. Retailers last year were more reluctant to have their warehouses filled, says Stefano Facco, new business development manager at Novamont.

"We were used to having double-digit growth in the last four to five years, but last year, we were able to achieve only single-digit growth worldwide," he notes.

Demand started recovering by the second half of 2009 and the recovery seems to be continuing this year, adds Facco. "We are quite optimistic that it will stay this way for quite some time."

STRETCHED THIN?
Small companies have especially been hit hard by the lack of credit last year, notes Scheer. Cereplast itself underwent major restructuring in 2009 as it moved manufacturing and laboratory operations from California to Indiana to cut costs.

The new plant, which started operations in early March 2010, has the capacity to produce 80m lb/year (36,000 tonnes/year) of Cereplast's starch-based bioplastics. The company is also in negotiations with a large global plastic compounder to toll manufacture its products.

The group expects its large US customers such as paper and packaging firm Georgia-Pacific, and juvenile products manufacturer Dorel Industries to commercialize their products incorporating Cereplast's bioresins in the first half of 2010.

Last July, Japanese chemical firm Teijin sold its stake in PLA joint venture (JV) NatureWorks to US agribusiness partner Cargill. NatureWorks was established in 1997 and had operated as a Teijin-Cargill 50:50 JV since October 2007.

Teijin will instead focus on its BIOFRONT heat-resistant PLA-based plastic. Teijin started operations of its 1,000 tonne/year bioplastic demonstration plant in Matsuyama, Japan, in September 2009, and plans to increase its capacity to 5,000 tonnes by 2011.

"We feel that our customers have been getting more and more interested in using bioplastics for their products. In fact, the number of inquiries we receive on BIOFRONT has been increasing both from domestic and overseas manufacturers," says Hideshi Kurihara, general manager of the high-performance biomaterials project at Teijin's new business development group.

Kurihara says Teijin also made significant advances, particularly in the performance upgrade and application development of its bioplastic. BIOFRONT was incorporated in commercial products such as eyeglass frames, automotive panels, car seat fabric, and clothing materials, which were all introduced last year.

"We envision exciting applications in the near future, such as in automotive and electronic components capable of withstanding harsh conditions. We are also developing BIOFRONT as a highly impact-resistant, antibacterial, and flame-retardant material for molding processes, which will further expand its application," Kurihara adds.

GROWING MARKET
NatureWorks spokesman Steve Davies says the firm's expansion focus this year is on the durable products market. In January, the company launched its second-generation PLA-based Ingeo bioresin, targeted primarily at injection molding of semidurable consumer products.

NatureWorks was able to increase Ingeo sales despite the continued recession, notes Davies. "Of course the growth was moderated versus what we saw in 2007-2008, where oil pricing was significantly high, but there was growth nonetheless," he says.

Not only was NatureWorks able to expand production last year, the firm is now starting to assess locations for its second facility, which is expected to start up in 2013-2014.

NatureWorks is also focusing on expanding programs with existing partners such as Frito-Lay, which plans to start selling its fully compostable, 100% Ingeo SunChips bag at US retail stores this spring.

US-based Metabolix notes that Telles, its bioplastic JV with US agribusiness firm Archer Daniels Midland, was able to maintain interest from customers and brand owners for material samples despite several delays since May 2008 in the start-up of its new production facility in Clinton, Iowa.

The 110m lb/year facility, which will produce PHA-based polymers under the brand Mirel, finally started operations in December 2009, although capacity utilization levels at Clinton are expected to remain relatively low for the next few quarters.

Telles has over 1,000 leads for businesses interested in testing material, says Bob Findlen, Telles's vice president of sales and marketing.

Several companies, he says, launched customer trials last year for its Mirel bioresins, including Newell Rubbermaid's Paper Mate biodegradable pen; Bioverse's AquaSphere PRO biodegradable pond and lake treatment system; and biodegradable disposable medical serviceware items, bed pans and trash bags from Netherlands-based Pharmafilter.

"Over the next 12 months, the chief task at hand is building production levels and efficiencies at the new Clinton Mirel facility," says Findlen. "Telles will continue to focus on its sales pipeline and in furthering established relationships when we begin shipping product to customers."

ANNOUNCED POLYMER CAPACITIES FOR MAJOR BIOPLASTIC PLAYERS
Product Company Location Capacity (tonnes) Price, $/lb
PLA NatureWorks US 140,000 0.85-1.20
PLA Hisun China 5,000 1.25
PHAs Metabolix US 300/50,000 (2010) 2.50-2.75
PHBV Tianan China 2,000 2.40-2.50
Mater-Bi Novamont EU 75,000 2.0-3.0
Cereplast Cereplast US 25,000 1.50 2.50
Others DuPont, Plantic, Innovia, Arkema and others Global 2,000 1.50 4.00
A high priority for Telles in 2010 is to increase development and production efforts within the film and compostable bag market, adds Findlen. The company also plans to expand its product-grade portfolio into the thermoforming and the foam market.

Keith Edwards, North America business manager for BASF's Ecoflex and Ecovio biodegradable plastics, says 2009 was a good year. "North America and Asia saw good growth last year, while Europe saw stable sales," he notes. "Growth drivers for North America stem from higher collection and diversion rates for organic waste for recycling instead of landfilling."

Food packaging is a major focus for BASF. The company launched last year its Ecovio FS biodegradable plastic for paper coatings and shrink film applications. Ecovio FS is made from combined corn starch-based PLA and BASF's biodegradable polyester Ecoflex FS.

BASF is also developing new packaging solutions for extrusion lamination and foams. "The use of bioplastics to replace traditional polymers in multilayer flexible packaging for snack foods, coffee and meats [is] growing," says Edwards. "Further developments of new shrink film, extrusion coating and lamination, and foam applications will drive further growth in packaging for 2010-2012."

CAPACITY HOT SPOTS
Overall, Europe seems to have fared better last year on the bioplastics front than the US, notes Scheer. "Europe has been experiencing continued large growth, probably led by demand for blown film applications. The US, I think, has suffered more because it is more focused on rigid packaging than films."

He adds that the rigid packaging business has been down significantly as retailers and food operators have been buying less.

BASF is expanding its Ecoflex production capacity at its Ludwigshafen, Germany, site to 60,000 tonnes/year from 14,000 tonnes/year. Start-up is expected in the third quarter (Q3). BASF is also increasing its bioplastic compounding capacity at Ludwigshafen.

Novamont is investing €50m ($68m) in a new 20,000 tonne/year vegetable oil-based monomers plant in Caserta, Italy, which is expected to start in Q2 2011. The monomers will be used in Novamont's newly launched second-generation Mater-Bi bioplastic, which contains the company's starch-based bioplastic with vegetable oil-based polyesters.

The investment will create a closed-loop system as Novamont will source feedstock from large local associations of farmers in Italy. "Securing raw materials is a big issue these days. We want to vertically integrate ourselves from feedstock down to the finished goods," says Facco.

While the US, Europe and Asia-Pacific have remained the top three bioplastic producers over the past five years, the Utrecht University study indicates South America as the emerging new, important player.

Brazil-based Braskem remains steadfast in its plans to build the world's first bio-polyethylene plant, with a capacity of 200,000 tonnes/year. The facility, which will use sugarcane-based ethylene, is expected to come on stream at the end of 2010.

The study also cites Solvay Indupa, the Brazilian business of Belgian chemical firm Solvay's plans to produce 120,000 tonnes/year of polyvinyl chloride (PVC) that will use sugarcane-based ethylene feedstock by 2011.

 

BIOPLASTIC IN BRANDS
Bioplastics are not limited any more to shopping bags and disposable cutlery. Major global companies in the food, beverage, cosmetics, electronics and even the automotive sectors have increasingly used bioplastics to enhance their products' image.

Coca-Cola launched in November 2009 its PlantBottle packaging, which contains between 15% and 30% sugarcane-based resins.

Mazda started incorporating in 2007 Teijin's BIOFRONT PLA-based plastic on the car seat fabric of its Premacy Hydrogen RE Hybrid vehicle.

Newell Rubbermaid started marketing early this year its new Paper Mate biodegradable pen and mechanical pencil containing Telles' Mirel resin.

Samsung launched in August 2009 its Reclaim mobile phone, which contains 40% bioplastic in its casing.

Frito Lay started selling this year its SunChips snacks contained in a fully compostable bag that incorporates NatureWorks' Ingeo resin.

SOURCE: EUROPEAN BIOPLASTICS

 

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By: Doris de Guzman
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