The Long and Short of PLA

I wonder at PLA, I wonder about it, it’s a wonder, it’s a mystery.

Two of the most bullish newsbites about the prospects for biobased polylactic acid are sitting on my desk. News that we have reported that n Thailand, leading polylactic acid producer NatureWorks has obtained a $350-million loan to finance its fully integrated PLA plant at the Nakhon Sawan Biocomplex. The loan, provided by Krungthai Bank PCL, will support both the construction and ongoing operations at the facility. The plant will utilize locally sourced sugarcane as feedstock.

Further, an expectation predicted here that PLA sales reached $1.01 billion in 2021, $1.89 billion in 2022 and is expected to grow to $3.11 billion by 2030, a CAGR of 6.42% in the 2023-2030 period. ) At around $3500 per ton, more or less, the growth rate cited in the report was something like 225,000 metric tons, in one year. And expecting something like 350,000 new metric tons of demand in this decade.

It’s phenomenal, if so. But is it? I wonder. I see some signs of hesitation that I associate with uncertain markets, not out and out bull markets.

Here’s what we reported: NatureWorks first announced the plant in June 2021. The facility will produce lactic acid, lactide, and 75,000 metric tons per year of PLA biopolymer, with startup expected in 2025. Here are some items I noticed in that.

1. Why is NatureWorks, which is one of a handful of major players, adding 75,000 tons in capacity?
2. Where’s the other construction?
3. Why did it take in the neighborhood of three years to complete the financing?
4. why is it based on debt at a time when debt is expensive?

Those are questions, not answers, and there are answers, but look at the number of questions. So, are we long or short on PLA? Is demand soaring, or nicely on the rise? As my surmise, let me put it to you this way.

1. I believe we are in a good, solid, rising market for PLA, for good reasons. But it’s not the Roaring Twenties, just yet.
2. I believe we are short PLA, not long, but not short by much. A plant’s worth
3. I believe it will be a very good market in the 2020s for incumbents, but I wouldn’t feel so cheery about new market entries, despite promising R&D efforts. 

TotalEnergies Corbion, NatureWorks and two or three others — good times, noodle salad. For others? The risks are less in technology than competition, application development, contracting, sourcing enough affordable feedstock, and so forth — the work that is taking place to develop alternatives to the alternatives is taking place in the labs, and I’m not sure that’s the right focus.

Here’s why I think so.

Applications

Last month we reported that CJ Biomaterials and NatureWorks have developed bioplastics for flexible packaging.  Last month we also reported that NatureWorks and IMA created a compostable coffee pod  In 2023, we reported that NatureWorks is expanding performance of its Ingeo biopolymer in hygiene applications  Also in 2023, we reported that Changsu Industrial, TotalEnergies Corbion collaborated to advance adoption of biobased BOPLA films  And we reported last year that TotalEnergies Corbion, Coexpan launched a biobased cup using recycled PLA Also last year, we reported that Danimer Scientific and TotalEnergies Corbion create PLA-PHA blend for compostable coffee pods

Partnership

In 2022, we reported on the NatureWorks, CJ partnership, here.and here.

Capacity

We reported that TotalEnergies Corbion has announced that it will not construct a previously announced polylactic acid bioplastics plant at Grandpuits. The announcement “follows a review of the investment case of the project and is in line with the announcements of the company’s shareholders,” TotalEnergies Corbion said in a press statement. And we reported back in 2021 that Capacity increases are planned for the company’s sites in Gorinchem, Netherlands; Rayong, Thailand; Campos, Brazil; and Montmeló, Spain. The company had previously announced a capacity addition at Blair, Nebraska as well. All the investments combined will add about as much capacity as a new plant.  Earlier this year, we reported that in India, Balrampur Chini Mills, a sugar producer, is investing €222.45 million to build a polylactic acid plant. According to Sustainable Plastics, the plant will have the capacity to produce 75,000 metric tons per year and be India’s first industrial-scale bioplastics plant. /

What is our takeaway?

This is an era of proprietary application development, deep partnerships and incumbents. All signs point towards robust growth in demand, but we don’t see anywhere a pace of capacity expansion that would reflect the growth story being offered by market reports. So, we wonder about the marginal players — the bigger players seem well down the path of turning partnerships into applications, applications into demand, demand into production. All good signs for a fine decade for PLA.

However, market entrants might take into account that NatureWorks was not, ahem, an overnight success. The first plant opened in Blair, Nebraska in 2011. Plant #2 — that’s the one being developed in Thailand right now. It’s impressive, it will likely do very well, especially given access to Thai cane and Asian partners. 

So, good news, PLA fans, but let’s hold off on the magnum of Veuve Cliquot, just yet. New capacity is coming online in the next year, let’s see the number of announces between now and then that the use set is expanding, and not just in proprietary applications of the kind that favor the incumbents. We won’t have long to wait to know if we’re short, or, to put it another way, we’ll know if we’re long, shortly.