When it comes to the most common contemporary chemicals in life, plastic is one of them. Because of its stable physical and chemical properties, it is widely used in packaging, catering, home appliances, agriculture and many other fields.
Looking back on the development history of plastics, the position of plastic bags is very important. Since the Swedish Celloplast company applied for a patent for polyethylene plastic bags and put them on the market in 1965, plastic bags have quickly become popular in Europe and quickly replaced paper and cloth bags.
According to data from the United Nations Environment Programme, plastic bags accounted for 80% of the European bagging market by 1979, and it took less than 15 years.
After that, it soon achieved the domination of the global bagging market. As of the end of 2020, the global market for plastic bags has exceeded 300 billion U.S. dollars (Grand View Research data).
However, with the popularity of plastic bags, environmental problems caused by large-scale use have also begun to appear. In 1997, the Pacific Garbage Strip was discovered, mainly composed of plastic garbage (mainly plastic bottles and plastic bags) dumped into the ocean.
Corresponding to the 300 billion U.S. dollar market, there will be 150 million tons of plastic waste in the ocean at the end of 2020, and it will increase by 11 million tons per year.
Figure 1: Bali beach in Indonesia is covered by garbage plastic bags. Source: IC Photo
The key to the huge accumulation of plastic garbage in the ocean is that the chemical structure of traditional plastics is relatively stable, so it is difficult to degrade in the natural environment, which brings acute environmental pollution problems. (Non-degradable plastics are collectively referred to as traditional plastics below)
However, because traditional plastics have been widely used and their physical and chemical properties are suitable for many application scenarios, they are difficult to be easily replaced by adding productivity and cost advantages.
Therefore, it not only has the main physical and chemical properties of traditional plastics, making it suitable for most of the existing plastics use scenarios, but also can rapidly degrade under natural conditions to reduce pollution. The degradable plastics that meet these two key points can be said to be The best solution at the moment.
The replacement of old things by new things usually takes an extraordinary process, especially to replace the traditional plastics that dominate in many fields. Whether biodegradable plastics can be a big task, investors who do not understand this market must have a lot of doubts. .
And this article will try to explain the following core issues:
- What is the most fundamental guarantee for the promotion and application of biodegradable plastics?
- How big is the market space for biodegradable plastics in the future?
- At what stage of development is my country’s biodegradable plastics market?
- What are the specific varieties of degradable plastics?
- What are the core targets related to biodegradable plastics in A-shares? What is the value of investment?
In order to allow investors to have a relatively clear understanding of the development prospects, market pattern, and investment value of biodegradable plastics.
Policy: From “plastic restriction” to “plastic ban”, subsidies can be expected
If an industry wants to make a big development, it is usually inseparable from related policy support, and the same is true for biodegradable plastics.
In order to control the pollution caused by the use of traditional plastics, my country has experienced a gradual tightening of its related policies in the past 20 years, which is consistent with the general tone of environmental protection policy changes.
In 2004, the “Solid Waste Pollution Prevention and Control Law” (hereinafter referred to as the Solid Waste Law) was revised for the first time, and my country began to pass legislation to encourage the use of degradable plastics.
In 2008, the “Notice on Restricting the Production and Sale of Plastic Shopping Bags” issued by the State Council came into effect on June 1 of the same year. This document is the first national-level “plastic restriction order” in China.
However, due to the rapid development of consumer industries such as food delivery and express delivery, the use of traditional plastics under the old plastic restrictions has not decreased but increased. Environmental problems have become more serious, and the original intention of plastic pollution control has not changed, and policy upgrades have become inevitable.
After 2020, relevant policies have been introduced intensively. Whether at the national level or at the provincial and municipal levels, the policy tone has changed from restricting plastics to a more stringent ban on plastics, and the enforcement is stronger than in the past. Relevant key policies at the national level include:
In January 2020, the “Opinions on Further Strengthening the Treatment of Plastic Pollution” jointly issued by the National Development and Reform Commission and the Ministry of Ecology and Environment;
In April 2020, the 2020 version of the Solid Waste Law passed by the 17th meeting of the Standing Committee of the 13th National People’s Congress;
In July 2020, the National Development and Reform Commission jointly issued the “Notice on Solid Promotion of Plastic Pollution Control” issued by the nine ministries and commissions.
The above-mentioned policies clarify the core content of the tasks and objectives of the various stages of plastic pollution control, and the legal responsibilities for related illegal activities, especially in areas with serious plastic pollution such as foreign sales and express delivery, and put forward strict bans on plastics.
At the same time, policies continue to encourage the use of biodegradable plastics to replace traditional plastics, and provide alternative guidelines for usage scenarios, such as commodity packaging bags, supermarket shopping bags, disposable tableware, agricultural film covers, and so on.
There is a long way to go in the treatment of plastic pollution. In addition to policy guarantees, it is also very necessary to raise public awareness of environmental protection through long-term education, deepen understanding of the meaning of environmental protection, and cultivate the habit of using biodegradable plastics.
However, the level of national environmental awareness is linked to the level of economic development to a certain extent, and it is subjectively and voluntarily. However, the implementation of the plastic restriction/prohibition policy is compulsory. The difference between the strengths and weaknesses of the two is clear.
Therefore, we believe that policy prohibitions and restrictions on traditional plastics and encouragement and support for degradable plastics are the core guarantees for the long-term prosperity of the degradable plastics industry.
And to cultivate the habit of using biodegradable plastics by improving the national environmental protection awareness, although to a certain extent, it will help the release of future demand. However, compared with the hard support of the policy side, this will be a soft catalyst that is more difficult to quantify the impact.
Compared with Europe’s main legislation to restrict plastics/ban plastics, my country’s plastics ban policy is currently mainly based on documents from ministries and commissions, and its enforcement power will be slightly weaker than the former. Therefore, it may affect the pace and pace of promoting the use of biodegradable plastics. The level of industry prosperity.
Looking back at the previous article that the level of national environmental awareness is linked to the economic level, this is essentially showing the problem of high cost of using biodegradable plastics in the process of replacing traditional plastics with biodegradable plastics.
Overall, the current price of degradable plastics is at least twice that of traditional plastics, and different types of degradable plastics have different prices, which greatly increases the cost of implementing the ban on plastics.
In the long run, to solve the cost problem fundamentally, we must rely on the progress of material science and reduce costs through product iteration. Due to the uncertainty in the pace of technological breakthroughs, policy subsidies can play a key role in reducing costs in the short term.
Throughout history, subsidy policies are usually a double-edged sword. While quickly boosting the industry’s prosperity in the short term, it will also give rise to some chaos, such as fraudulent subsidies, enterprises not thinking about making progress, and so on.
Although these short-term chaos may interfere, but from the perspective of the lengthening cycle, when the subsidy policy is introduced in the initial stage of the industry, the metropolis will play an obvious role in promoting. This logic has been verified in the photovoltaic, new energy automobile and other industries. It can be said that the advantages outweigh the disadvantages.
At present, the subsidy policy for degradable plastics has not yet been implemented, but the ban on plastics has taken the lead, and there have been successful examples before. In order to solve the difficult promotion of degradable plastics due to the high cost, relevant subsidy policies are very worth looking forward to.
The market space of biodegradable plastics in my country: The key is the replacement rhythm of traditional plastics
Traditional plastics are widely used, especially in packaging, catering and many other markets, and it is difficult to quickly replace them. Even if the current policy support is relatively in place, the replacement of traditional plastics by biodegradable plastics will still be a long process.
Looking at the market space of my country’s biodegradable plastics, according to IHS data, the domestic production capacity of biodegradable plastics is about 617,000 tons in 2019, accounting for about 47.5% of the total global production capacity.
Figure 2: Global production capacity distribution of biodegradable plastics in 2019 Source: IHS, 36Kr
Although production capacity occupies a relatively high position in the world, domestic consumption has actually not been much in recent years. According to the few statistical data, my country’s consumption of degradable plastics in 2018 was 42,000 tons, accounting for only 4.6% of the total global consumption (data from the European Bioplastics Association).
According to the data of China Industry Information Network, my country’s demand for degradable plastics in 2018 is about 450,000 tons. From this, it can be roughly calculated that the penetration rate of degradable plastics in my country in 2018 is 9.3%.
The reason why it is significantly higher than the mainstream forecast is that most other institutions use the current policy-oriented market expectations to evaluate the penetration rate data in 2018, rather than the relatively negative expectations at that time.
From the previous policy evolution, we can see that 2020 is an important watershed. Before 2020, because the implementation of plastic restrictions is not strict enough, which affects the introduction of degradable plastics, the degradable plastics produced in my country are mainly exported.
After 2020, with the advancement of the new plastic ban, the industry has entered a period of rapid development, and both the expansion of production capacity and demand will be clearly visible.
Moreover, under the clear guidance of policies, the path for degradable plastics to replace traditional plastics is clear, but it takes time to build production capacity and cultivate usage habits.
Therefore, it can be foreseen that due to the limitation of production capacity and policy implementation, the actual consumption expansion is not as fast as the release of potential market demand, and the penetration rate data at that time will appear to be rapidly smaller than in 2018.
The reason why we have to explain clearly the changing process of the penetration rate is to show that my country’s degradable plastics market is still in its infancy. Even if the penetration rate in 2018 is 9%, the value does not seem to be low, but the potential demand at that time is not Caused by clarity.
For the expansion of future demand, the specific direction is also traceable in the current policy. The replacement of biodegradable plastics is mainly in the four aspects of shopping bags, disposable plastic tableware, express packaging and agricultural plastic films.
At the same time, 2025 is an important time node in the existing plastic ban. In particular, in the “Opinions on Further Strengthening the Treatment of Plastic Pollution” by the National Development and Reform Commission, specific targets have been set for the above-mentioned aspects in 2025.
Therefore, it is very meaningful to estimate the degradable plastics market space in 2025, which not only takes into account the production capacity construction cycle, but also leaves enough time for logic verification.
Based on authoritative industry data such as the Bureau of Statistics, CFLP, and Industry Information Network, and after reasonable deduction, we predict that by 2025, the actual domestic demand for degradable plastics will be at least 2.5 million tons.
In terms of price, the current price of biodegradable plastics is at least twice that of traditional plastics. If, in the next 4 years, take into account possible subsidy policies, technological iterations, capacity expansion and other factors leading to price cuts.
Assuming that the average price of degradable plastics will fall to 15,000-20,000 yuan/ton, the market capacity of degradable plastics in my country in 2020 is expected to be in the range of 375-50 billion yuan.
Main varieties of degradable plastics
As a class of chemical products, biodegradable plastics have different physical and chemical properties and operating costs among different varieties. At present, there are two common classification methods for degradable plastics:
- According to the degradation mechanism, it can be divided into three categories: biodegradable plastics, photodegradable plastics and photo-biodegradable plastics. Among them, biodegradable plastics are currently the mainstream varieties.
- According to synthetic raw materials, it can be divided into two categories: bio-based degradable plastics and petroleum-based degradable plastics. Among the three main current degradable plastics mainly introduced below, the representative of bio-based is PLA, and the representative of petroleum-based is PBAT and PBS.
Here, for mainstream biodegradable plastics, there are three more knowledge points that must be explained in advance:
- The biodegradable mechanism is divided into incomplete degradation and complete degradation according to the degree of degradation;
- The three degradable plastics, PLA, PBAT and PBS, all have complete degradation mechanisms;
- At present, in the world, incompletely degradable plastics have the largest production capacity (starch-plastic mixtures can only be partially degraded); among completely degradable plastics, PLA has the largest production capacity, followed by PBAT and PBS.
Figure 4: Global production capacity of various degradable plastics in 2019. Source: Qianzhan Industry Research Institute, 36Kr
4.1 PLA: The world’s mainstream variety, domestic production capacity is scattered
Let’s first look at PLA, whose chemical name is polylactide, which is a type of organic polymer material. Since the upstream of its synthetic chain contains lactic acid that can be produced by microbial fermentation, it is classified as bio-based degradable plastic from the source.
In terms of physical and chemical properties, PLA is excellent in toughness, heat resistance, transparency, etc. and is non-toxic. It can be used in daily life and agriculture, and can even be used for 3D printing.
However, it is easily degraded under natural conditions, especially in humid environments. Therefore, PLA needs a dry storage environment, and the storage period should not exceed two years, and it is not suitable for sealed packaging, which raises the cost of using PLA to a certain extent.
In terms of production capacity, according to industry information network data, the global PLA production capacity was 500,000 tons in 2018, accounting for about 40% of the global total production capacity of biodegradable plastics. According to incomplete statistics, the current domestic production capacity of this product is about 300,000 tons.
The total volume does not seem to be low, but in fact, PLA’s domestic production capacity is very scattered, and the participating companies are not few, but most of the companies’ production capacity is less than 20,000 tons, and the overall situation is still in its infancy.
4.2 PBAT: The current domestic mainstream construction varieties
Look at PBAT again. The chemical name is polyadipate/butylene terephthalate. It is a copolymer of PBA and PBT. In terms of physical and chemical properties, both have the characteristics of high elongation, tensile resistance, and relative heat resistance. , Mainly used in packaging, agricultural film, etc.
According to statistics, the current domestic PBAT production capacity is 220,000 tons. Although the pattern is similar to PLA and is generally dispersed, the leading companies have already emerged. Kingfa Technology has put into production capacity of 120,000 tons and planned production capacity of 180,000 tons.
Across the country, there are many projects under construction and planned. Small projects are not listed for the time being. Large projects are mainly 1.3 million tons of Xinjiang Wangjinglong New Materials (planned to start production in 2022) and Zhejiang Huafeng New Materials 300,000 tons (start-up time uncertain).
4.3 PBS: A new generation of fully biodegradable plastics, and plans for large-capacity construction are now available
PBS, the chemical name polybutylene succinate, as a new generation of degradable plastics, has better physical and chemical properties, and its processing properties are outstanding among the existing varieties. It can also be combined with PBAT to form a blend with better physical and chemical properties. material.
Therefore, the practical application of PBS is also more extensive. In addition to common catering, daily necessities, and agricultural films, it can also be applied to foaming materials and fertilizer slow-release materials.
Domestic production capacity is still relatively small. According to data from China Industry Information Network, the current total production capacity has just exceeded 100,000 tons. However, the proposed large-capacity projects that have been disclosed have appeared, such as the 900,000 tons (PBS/PBAT) planned by Hengli Petrochemical.
Degradable plastic core listed companies combing
Under the policy spring breeze, degradable plastics have a bright future. At present, there are not a few A-share listed companies involved in the degradable plastics business. Under the category of wind degradable plastics, a total of 26 listed companies have been recorded.
