The most stringent 'plastic limit order' fires PLA!

The problem of plastic pollution called "white trash" has become increasingly prominent.

The Organization for Economic Cooperation and Development (OECD) issued a report in 2018 that more than 300 million tons of plastic waste flows into the environment every year, causing huge pollution.

This data is still growing rapidly.

Scientists pointed out that the natural degradation cycle of plastic bags, plastic bottles, plastic straws and other products can reach hundreds of years.

It is urgent to control plastic pollution.

In January 2020, the "Opinions on Further Strengthening the Treatment of Plastic Pollution" was issued, proposing that by 2020, it is the first to ban or restrict the production, sales and use of certain plastic products in certain areas and areas.

Only half a year later, in July, the "Notice on Solid Promotion of Plastic Pollution Control" was issued, requiring localities to issue provincial implementation plans before mid-August.

Now that the red line of time has come, some ordinary plastic products must exit the stage, and biodegradable plastics will take over.

As a result, the biodegradable plastic raw material-polylactic acid has become popular and has become a new outlet.

Hard to find a single product: orders are scheduled until next year

On January 19, 2020, the Chinese New Year of the Year of the Rat is approaching, and many factories have already closed. Qin Lin (pseudonym), the person in charge of a plastic raw material manufacturer in Foshan, Guangdong, is doing the daily work of accounting and planning for the coming year. Originally willing to develop smoothly, he was suddenly attracted by a piece of news.

In January 2020, the "Opinions on Further Strengthening the Treatment of Plastic Pollution" was issued. Non-degradable plastic bags, disposable plastic tableware, disposable plastic products in hotels, express plastic packaging, etc. are included in the list of prohibited and restricted plastic products. , The "Opinions" put forward a clear timetable for the prohibition and restriction of some plastic products.

One of the basic principles of the “Plastic Restriction Order” is to be recyclable, easy to recycle, and degradable, to develop and promote plastic products and alternative products that meet the performance standards, green and environmentally friendly, and economical and applicable, and cultivate the New business and model of plastic pollution.

Since then, in mid-July, the National Development and Reform Commission and other nine departments jointly issued the "Notice on Solidly Promoting Plastic Pollution Control", expressing the need to implement territorial management responsibilities and requiring localities to issue provincial implementation plans before mid-August.

For a time, biodegradable plastics became the focus of social attention.

Due to its good tensile strength and ductility, and its price is lower than other biodegradable materials, polylactic acid has become one of the most concerned raw materials and is considered an important development direction for biodegradable materials. In the "Thirteenth Five-Year Plan for Scientific and Technological Innovation in the Material Field" formulated by the Ministry of Science and Technology, high temperature resistant polylactic acid is listed.

Qin Lin said: "Many companies are already rushing to buy polylactic acid. It is difficult to buy polylactic acid through the original procurement channels. It is useless to spend high prices, and they are out of stock."

Qin Lin's words have also been confirmed by some major domestic polylactic acid manufacturers.

A staff member of Zhejiang Hisun Biomaterials Co., Ltd., which has a large-scale domestic production of polylactic acid, said that the company's degradable plastic raw materials for the production of disposable tableware, straws and other products are not in stock, and can only wait until early next year. Try to contact enterprises. "The company's production capacity is limited, and the current order schedule is quite full. If the customer places an order now, we can't arrange it."

Jiangsu Tianren Biomaterials Co., Ltd. is an enterprise that produces biodegradable plastic products such as fully biodegradable mulch, various types of shopping bags, garbage bags, tableware, etc. Since it cannot purchase polylactic acid raw materials, it has even shut down some production lines.

The company's staff said that because the production plant is in Henan, the products must be supplied to the Henan market first, and the balance will be sold. The raw materials for disposable tableware will not be confirmed until the end of the year until the end of the year, and may also give priority to the Henan market.

The capital market reacted strongly.

Since the announcement of the "Opinions", major concept stocks have seen significant increases. From January 20 to August 11, COFCO's share price rose by 42.08%, while Jindan Technology's share price has risen by 279.05% since its listing on April 22. Due to the concept of degradable plastics, Mogao shares have continued to increase their daily limit. According to the company's 2019 annual report, the company has built a new biodegradable polyester new material project with an annual output of 20,000 tons. The project has started construction during the reporting period.

The price skyrocketed: 10,000 yuan a month

Due to policy guidance, the polylactic acid market, which was originally over-supply, was suddenly in short supply. The lower production capacity has further increased the market gap.

According to Qin Lin, the production capacity of biodegradable plastics is lower than that of general-purpose plastics, and the current production capacity is far from meeting domestic demand. For example, NatureWorks, the world's largest polylactic acid manufacturer, has an annual output of only a few hundred thousand tons, while domestic manufacturers of general-purpose plastic raw materials have an annual output of several hundred thousand tons. Low production capacity leads to slight changes in demand, and price fluctuations will be very large.

According to data released by Zhiyan Consulting, as of 2019, the global annual production capacity of biodegradable plastics was 1.077 million tons. Among them, PLA (polylactic acid) is 269,000 tons, accounting for 25%; PBAT (polyadipate/butylene terephthalate) is 258,500 tons, accounting for 24%; starch-based degradable plastics are 409,300 tons , Accounting for 38% of global biodegradable plastic production capacity.

"In the past, the market price of polylactic acid was very stable, maintaining at about 20,000 yuan a ton." Qin Lin said that 2019 experienced a wave of increases, mainly because last year cigarette filters began to use polylactic acid materials, and a French company bought it all at once. Tens of thousands of tons of polylactic acid, causing the price to rise suddenly.

According to Qin Lin, at the end of 2019, polylactic acid has reached 30,000 yuan a ton, and this year it has risen rapidly, rising to about 50,000 yuan per ton.

Xia Guangjun (pseudonym), the person in charge of an enterprise in Guangdong, pointed out: “A month ago, it was still 40,000 yuan per ton, but now it has increased by 10,000 yuan a month. Based on the 50% to 100% profit of synthetic materials, the original polylactic acid sold 2 10,000 yuan, the cost should be around 10,000 yuan. Now the production cost has not increased, but the market price has been sold to 50,000 yuan."

Many manufacturers offer the cheapest price at more than 40,000 yuan, but they are out of stock.

A person in charge of an enterprise in Shenzhen said that the company currently does not sell polylactic acid raw materials, but only sells polylactic acid synthetic materials, which cost about 50,000 yuan a ton. The specific price depends on the purchase amount.

Industry expansion: two months to queue for qualification certification

The production of biodegradable plastic raw materials requires relevant qualifications. Xia Guangjun said that the company started its layout relatively early and production certification is also in progress.

In fact, Xia Guangjun was not in a hurry, but the "plastic limit order" pushed him. After seeing the news, he immediately called the colleague who was in charge of applying for the qualification and asked to speed up the work progress.

According to Xia Guangjun, there were not many companies that applied for qualifications before, but since March and April this year, more companies queued up.

In terms of process, to apply for a certificate, you need to submit company materials for review, and then test the new materials.

Companies are now waiting two months after queuing to apply for qualifications, and the test cycle is as long as six months to one year.

Why is the queue so serious after March and April? Xia Guangjun explained that after the "plastic restriction order" was issued, many companies started to apply. A lot of materials need to be prepared in the early stage. Coupled with the impact of the epidemic, there is a certain delay.

Qin Lin's company is also applying for qualifications. Qin Lin said that biodegradable plastic materials need to be deployed in advance, and whoever obtains the relevant qualifications first will definitely increase orders for companies.

"Now many customers are urging us to get the relevant certificates as soon as possible, because the downstream response is very fast, and many companies in the consumer market have stopped using non-degradable ordinary plastic products." Qin Lin said.

The market demand for polylactic acid is increasing rapidly, and some major domestic manufacturers are also accelerating the expansion of production capacity.

According to the staff of Zhejiang Hisun, the company's current production capacity is 15,000 tons, and the new production line of 30,000 tons is expected to be put into operation by the end of this year.

In addition, Jindan Technology's 10,000 tons and Kingfa Technology's 30,000 tons polylactic acid production capacity plans are under construction. In 2019, Anhui Fengyuan Group's million-ton-level bio-new material polylactic acid project settled in Tongliao Economic and Technological Development Zone in Inner Mongolia; Shandong Tongbang promoted the 200,000 tons/year polylactic acid project; Zhejiang Youcheng 500,000 tons/year polylactic acid project landed Chongzuo, Guangxi.

Cinda Securities believes that according to estimates, by 2025, my country's demand for biodegradable plastics is expected to reach 1.3 million tons. At present, the demand for degradable plastics in my country is less than 100,000 tons. In the next five years, under the promotion of the "plastic restriction order", the demand for degradable plastics in my country will increase substantially.

Capital influx: Someone has begun to stock up

The high price of polylactic acid is just an imbalance between supply and demand in the market?

Question: To what extent has the difficulty of purchasing polylactic acid reached?

The person in charge of a polylactic acid sales company: If a company can digest more than 500 tons of polylactic acid a year in 2018, then this company can still buy a certain amount of polylactic acid through its original procurement channels. If this scale was not reached at that time, in the case of price increases, the supplier would not take care of the buyer at all.

Question: What is the price of polylactic acid from stable supply channels?

The person in charge of a certain polylactic acid sales company: There is a stable supply channel, and the price is definitely much lower. If you sell it, you can make a huge price difference.

Question: Has anyone deliberately hoarded lactic acid and sold it when the price was high?

The person in charge: The news I got is that many people are now hoarding goods, waiting for the price to rise for a while before selling them.

Question: Are plastic processing companies mainly stocking goods?

The person in charge: In addition to companies in the plastics industry, some trading companies have seen market opportunities and have begun to stock up.

Qin Lin also confirmed that someone was hoarding goods, but the scale was not large. Everyone thinks that there is still a lot of room for prices to rise, but his judgment is just the opposite.

Qin Lin believes that many companies are now expanding production capacity, and some companies are also transforming into the industry. After these production capacities are up, the tension on the supply side will ease and prices will inevitably fall. "After half a year, the price should come down."

There is another reason: if the price of polylactic acid keeps rising, the market may accelerate the production of alternative products. For example, substitute paper products. This will also bring down the price of polylactic acid.

Will domestic polylactic acid increase rapidly?

Xia Guangjun has some different views. He believes that polylactic acid degradable plastic raw materials are synthesized from corn, using biological fermentation methods, and there are certain technical barriers. At present, the core technology is monopolized by some European and American companies. Domestic companies started late in this regard and their technology is not yet mature.

At the same time, Xia Guangjun said that expanding production capacity requires building a new production line. The cycle is generally 1 to 2 years. Although many companies are now expanding production capacity, it is not clear whether the market supply will increase rapidly.

Cinda Securities analyzed that as of 2019, my country's total production capacity of biodegradable plastics reached 657,000 tons, accounting for 48.2% of global production capacity. However, it needs to be pointed out that some of the current production capacity cannot be started due to various reasons such as technology and cost, resulting in a low capacity utilization rate of only about 30%. The production technology of polylactic acid is still immature, and there is great uncertainty in production.

Industry prospects: vicious competition may appear in the long run

Qin Lin's company originally only made general-purpose plastic raw materials, but the "plastic restriction order" changed the company's development direction.

He introduced that the company is accelerating its deployment in the biodegradable field. It has signed sales contracts with some large plastic processing companies and will use their market resources. "The position of biodegradable plastics in the company now far exceeds that of general-purpose plastic products."

Because they are optimistic, not only the product companies that are included in the "plastic restriction order" are transforming, some processing companies that are not included in the ban are also considering transformation.

A person in charge of a composite plastic processing enterprise for electrical components said that composite plastic products for electrical components are not within the scope of the ban, because of the durability of the product, it is impossible to replace it with biodegradable plastic in the short term. The market and source of customers are different. To make biodegradable plastics is equivalent to cross-industry, but because of the huge market potential, many companies are considering transformation.

"Many people think that this field has good prospects for development, and they are all entering." Qin Lin said that recently, several institutions that have not done research in this area before are also inquiring about degradable plastics and want to enter this industry.

Public data shows that from 2010 to 2019, a total of 2.636 million new plastic products-related companies have been registered. There were 347,000 new registrations from January to June 2020, a year-on-year increase of 30%. Among them, the number of registrations reached 234,000 in the second quarter, a year-on-year increase of 56%.

The situation in the biodegradable plastics industry is very good, but the industry is worried. Qin Lin analyzed with his own years of experience that in the plastic products industry, as long as the profit is higher than 20%, it is definitely a very good project. Now the profit in the biodegradable field is very high, and a large number of companies are participating. In the short term, it may be difficult for the downstream to obtain raw materials, and vicious competition is likely to occur in the long term. "In this way, the profits of the industry will be lowered, and eventually, a group of companies will leave the industry."

"We need to look at the development trend of the entire industry. After a year or two, companies that have just entered may feel that they are not profitable, they will switch jobs, and they will also sell some production equipment. This is an opportunity for us. At that time we will purchase some equipment or enterprises at low prices." Qin Lin said.