Many places reiterated the promotion of the fully biodegradable plastic film industry and called for benign investment to avoid supply and demand imbalances

Financial Associated Press, July 22 (Reporter Teng Fei) Recently, Chongqing, Hebei and other places once again issued a document to reiterate the acceleration of the implementation of agricultural cleaner production
.
At the same time, the Ministry of Industry and Information Technology also stated that it will promote the high-quality development of agricultural film, speed up the adjustment of product structure, optimize supply, and inject a "strengthening needle" for the promotion and application of fully biodegradable plastic film
.

However, it is worth noting that the production capacity of degradable materials represented by PBAT has begun to increase this year, and the price is still in a downward cycle
.
Market participants are generally cautious about the prospects of the industry, and relevant industry associations have publicly warned against the imbalance between supply and demand of PBAT
.

Policy spring breeze is expected to revive PBAT demand

As the main material of degradable plastic film, PBAT has been declining in the market recently, and the operating rate can only be maintained at about 30%
.

An analyst from Zhuochuang Information told the Financial Associated Press: "Now the market is sluggish, prices continue to decline, and operating rates continue to decline.
Local governments reiterate that the promotion of degradable materials has the potential to boost market demand.
In the later period, we must pay close attention to the implementation of policies.
PBAT manufacturers The main competitiveness comes from the ability to control costs
.
”

PBAT is a thermoplastic biodegradable plastic, which is a copolymer of butylene adipate and butylene terephthalate.
It is a technology-intensive product with a high market concentration.
The downstream consumer market is mainly agricultural film, packaging, industry and other fields
.

According to Zhuochuang statistics, China's annual apparent consumption of plastics is about 80 million tons, and the apparent consumption of plastic products is about 60 million tons.
By 2025, China's demand for biodegradable plastics is about 4 million tons, PBAT and PLA is the main variety, of which the market demand for polylactic acid is about 2 million tons, and the CAGR (22E-25E) is expected to exceed 70%
.

As the main downstream demand side, plastic film has ushered in the policy spring breeze recently
.
In mid-July, the Ministry of Industry and Information Technology publicly stated that the agricultural film industry should promote high-quality development from three aspects.
One is to promote the strict implementation of standards such as "Polyethylene Blown Agricultural Ground Cover Film" to ensure the quality of agricultural film products; the second is to speed up the adjustment of product structure.
, optimize the supply; the third is to attach importance to the promotion of fully biodegradable plastic film
.

At the same time, Chongqing and Hebei also reiterated their promotion of fully biodegradable plastic film in mid-July
.

The Chongqing Municipal Development and Reform Commission issued the "Chongqing City's 14th Five-Year Plan" Cleaner Production Implementation Work Plan.
The plan calls for improving the construction of the agricultural plastic film recycling system, carrying out experiments and demonstrations of thickening and fully biodegradable plastic film, and proposing that by 2025, agricultural The membrane recovery rate reaches the target of more than 90%
.

At the same time, the Hebei Provincial Department of Agriculture and Rural Affairs and the Provincial Department of Finance issued the "Hebei Provincial Implementation Plan for the Scientific Use and Recycling of Plastic Films", which made clear plans for the application scope and subsidy methods of degradable plastic films
.

The plan proposes that Hebei Province will promote the application of 3 million mu of thick high-strength plastic film and 500,000 mu of fully biodegradable plastic film in 2022, and the recovery rate of plastic film in the pilot area will be stabilized at more than 80%
.
By 2025, promote the province's plastic film recycling rate to reach more than 85%.
For fully biodegradable plastic film, subsidies will be carried out in the form of direct subsidies, first-buy-after-subsidy, and indirect subsidies
.

PBAT supply and demand imbalance is emerging

Under the background of the country's active promotion and key subsidies for fully biodegradable plastic film, the future market of fully biodegradable plastic film is broad
.
According to data from the National Bureau of Statistics, it is estimated that by 2024, the coverage area of ​​plastic film in China will reach 330 million mu, and the usage will exceed 2 million tons, which means that there is a large alternative space for fully biodegradable plastic film
.

The vast demand, coupled with the hot market of degradable materials in the early stage, once ignited the enthusiasm of industrial capital.
The two-year construction cycle is approaching, and a large number of production capacity will be launched by the end of the year.
Will this lead to an imbalance between supply and demand?

According to statistics from the Biodegradable Resin Branch of China Synthetic Resin Association, it is estimated that the planned annual production capacity of PBAT resins will be about 15 million tons by 2025
.
As of the end of April this year, domestic PBAT resins have achieved an annual production capacity of 462,000 tons, and it is expected that by the end of 2022, the annual production capacity will reach 2.
26 million tons
.
In 2021, the actual domestic sales of PBAT resins are only 150,000 tons, and it is expected to be around 200,000 tons in 2022
.

The association issued the "Proposal on Promoting the Healthy and Orderly Development of the PBAT Resin Industry" in early July, suggesting that PBAT has overcapacity and the prospect is not optimistic, and investment should be cautious
.
For enterprises that have already put into production, it is necessary to rationally plan production capacity and output, and maintain low-load operation.
For enterprises that are testing vehicles, it is recommended to delay production or switch to other varieties.
For enterprises that plan to invest, it is recommended to enter the market cautiously
.
At the same time, the association recommends that the industry broaden the application scenarios of PBAT and increase international market promotion
.

Looking back at the PBAT market, after ushering in the highlights in 2021, the price will gradually return to rationality
.
Since the beginning of this year, the price has been weakening continuously.
According to Baichuan Yingfu data, the latest market average price of PBAT is about 21,200 yuan/ton, a drop of about 20% compared with 26,000 yuan/ton at the beginning of the year, and a drop of 20% compared to the 2021 high of 35,000 yuan/ton.
40%
.
The price of BDO, the key raw material of PBAT, has also dropped significantly, from 31,000 yuan/ton at the beginning of the year to 15,200 yuan/ton, almost halving
.

"The sharp drop in raw material prices can promote the cost optimization of PBAT, but the price support of PBAT still needs to look at downstream demand.
It is a wise move for enterprises to maintain low-load operation
.
" The aforementioned analysts told the Financial Associated Press
.

As expected, the PBAT production capacity invested and constructed by industrial capital in the early stage began to be gradually implemented this year, but most of them were maintained and debugged to maintain low-load operation
.
Donghua Technology (002140) stated that the PBAT production unit was successfully started at one time on June 20, 2022.
At present, the PBAT unit is in the production and commissioning period, maintaining low-load operation, and the products all meet the national standards
.