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February 10, 2006 01:00 AM

Conditions favorable for bio-resin pursuits

Frank Esposito
Senior Staff Reporter
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    (Feb. 13, 2006) — For bio-based plastics, 2006 could yield a bumper crop — or a killer frost.

    Traditionally, these materials have been under-represented in the North American market because of two large factors: price and performance. Resins based on corn and other natural products were higher priced than standard commodity resins — sometimes costing two or three times as much — and often lacked the strength and durability needed for many basic plastics applications. They were more successful in Europe, where landfill space is at a premium and recycling is a necessity.

    But along came 2005. Oil and natural gas prices shot up. The hurricane season made things more extreme, with many materials going up 20-60 percent. At the same time, bio-resin makers were getting more skilled at their trade, increasing capacities bit by bit and improving their goods' performances. The topmost example is the 300 million-pound capacity plant opened by NatureWorks LLC in Blair, Neb.

    Bio-resins now have the opening they needed. Increased proficiency and production are lowering their prices, while the NatureWorks project's size persuaded retail warlord Wal-Mart to use polylactide resin in its produce containers. Wal-Mart expects to use 100 million PLA containers a year. The NatureWorks-Wal-Mart deal was a chicken-and-egg scenario. Wal-Mart couldn't commit business until there was a supplier large enough to meet its needs; bio-resin makers didn't want to build larger plants until there was enough business. It helped that corporate titans Cargill Inc. and Dow Chemical Co. were the initial investors. (Dow has since sold its share to Cargill.) Building a big bio-resin plant in Nebraska was a risk, but neither firm was going to lose its collective shirt if the thing went belly-up.

    To put things in perspective, the NatureWorks plant represents about 40 percent of global bio-resin capacity, according to statistics presented at the recent Commercializing Bioresins conference. Italian bio-resin maker Novamont SpA, with nearly 20 years in the game, still has less than 100 million pounds of annual capacity. The bio-resin effort is definitely less of a sprint and more of a marathon.

    But the deliberate nature of the bio-resin field may work against it. After the big second-half run-up, commodity resin prices are drifting down. PET, targeted by many bio-resin firms in packaging, saw prices rise up to 26 percent at one point (since Aug. 1), but producers already have given back about half of that. New PET capacity is set for North America in 2007, which also could dampen prices, affecting the chances of PLA and other bio-resins to catch on.

    Other firms are entering the field, drawn by its long-term potential. DuPont Co.'s venture with Tate & Lyle plc should be making commercial bio-resins in Loudon, Tenn., later this year, and BASF AG is adding a PLA product to its bio-resin mix.

    But the success of bio-resins in North America will be determined by price and performance. The products have to do what they claim and by most accounts are improving. As for price, let's just say many North American firms would love to present a bio-friendly face — but there's a limit on what they're willing to spend.

    Esposito is an Akron-based staff reporter for Plastics News.

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