Oil prices started to creep up again in Europe to a level of $60-70 per barrel earlier this year. But by the end of July they had dropped back to around $50. For the 18 eurozone member states the overall cost increase over the past year has been higher because of the depreciation of the euro against the dollar.
Prices for agricultural feedstocks for biomaterials have also been declining but not as sharply as those for crude oil. Over the past year world agricultural commodity prices have gone down by an average of around 10 percent. But the cost of some key feedstocks decreased more steeply – for example, soyabean oil by 15 percent and corn/maize by 18 percent.The world price of sugar, which is an important feedstock for a range of new biochemicals used in coatings, has plummeted by a third over the last 12 months. But in the European Union the fall has been half that because of EU restriction on sugar imports.
“The widening of the price difference between biochemicals and petrochemical-derived materials is a disadvantage in the market at the moment, even though the biochemicals have a similar performance,” said a chief executive of an SME supplier of coatings biomaterials.
“With some coatings biochemicals the price premium can be as high as 30 percent, giving them only a 5-percent share of the market,” he added. “If that premium could be brought down to around 5 percent then the market share could be pushed up to 30 percent. With a much higher volume of biochemicals we could achieve that change in at least parts of the coatings sector.”
However some coatings companies are finding that the price gaps between petrochemicals-based chemicals and biomaterials is gradually having less of an impact on purchasing decisions.
“The oil-price and the price difference between biomaterials and petrochemical-derived products is in a sense related, although not interlinked or depending on each other,” said Sjaak Griffioen, director, innovation, strategy and sustainability at DSM Resins & Functional Materials, a major user of biomaterials in the production of coatings resins. “Economics are important but not a key driver for decision makers,” he continues.
A preference for plant-based polymers is much more driven by environmental awareness and what he calls ‘responsible consumption’, which takes into account both environmental effects and social concerns.
“(It) is quickly spreading across different markets and is expected to have a growing impact on the paint and coatings market,” he claimed.
Analysts reckon that green corporate strategies are among a number of underlying forces which over the next several years will gradually increase the share of biomaterials in coatings and other sectors, particularly those in which the key customers are large international brand owners.
“Some leading brand owners are now using biomaterials as part of a long-term sustainability strategy,” explained Petri Vasara, head of biofutures at Finnish-based Poyry Management Consulting, which at the beginning of this year published a report on bio-based chemicals. “These brand owners are a major factor behind the steady growth in demand for biomaterials, particularly since they tend to be very good at influencing and managing value chains.”
Since the market for biomaterials is so small at the moment – in Europe and elsewhere –their development tends to be driven by partnerships between players along the supply chain – from the processors of the basic chemical building blocks through to the coatings producers themselves.
Demand for bioplastics, which has the largest end-use by volume among biochemicals, amounted to only 900,000 tons globally in 2013, according to Poyry.
European Bioplastics, the European producers’ trade association, estimates the total was two years ago 1.6 million tonnes but that includes bio-based PET, the biggest product category, with a biobased content of only 30 percent.
Only a tiny proportion of these bioplastics are used to make coatings resins, the main outlet for biomaterials in the coatings market.
“Partnership is the name of the game in what is not yet a large market,“ said Vasara. “Even the big companies are teaming up with others because of the difficulties of going it alone in such a market.”
DSM has been among the frontrunners in creating development and supply partnerships in biomaterials. It has combined with Roquette Freres, a French producer of starch and other plant-based raw materials, to form a joint venture for the production of sugar-derived succinic acid for making polymers and resins.
Among coatings producers in Europe AkzoNobel has been involved in the creation of a number of partnerships and alliances in the development of biochemicals, usually with the aim of sharing costs or assuring a sales outlet for a new biomaterial.
One of the first of these was a deal reached two years ago with Solvay of Belgium for the supply of a bio-based epichlorohydrin to make epoxy resins for use in AkzoNobel coatings and other products. AkzoNobel has recently extended an agreement with the US biotech company Solazyme for the annual supply of 10,000 tons of algae-derived oils being jointly developed by the two companies.
It has also teamed up with the Colorado-based biorefining technology company ZeaChem Inc in exploring the potential in Europe for a large-scale plant for making bio-based acetic acid as a building block for a range of derivatives.
“In order to lead the deployment of biomaterials materials in our markets, we have been setting up partnerships across our supply chain,” explained an AkzoNobel spokesman. “This supports the emergence of a new bio-based industry, and at the same time enables AkzoNobel to tap into alternative feedstock sources.”
The main objectives behind AkzoNobel’s use of biomaterials in its products is the lowering of carbon footprints and the achievement of greater resource efficiencies.
“A considerable share of AkzoNobel’s environmental footprint is embodied in the raw materials we buy, and most bio-based materials exhibit lower footprints,” the spokesman says.
Market research reports have been forecasting that European bioplastics demand could grow by as much as a 35-percent compound annual growth rate (CAGR) to 2030. But BIO-TIC, an European Union -funded project for promoting industrial biotechnology, has argued that a CAGR of 10-15 percent may be more realistic. But, because of the sector’s lack of cost competiveness , that growth rate may not be achievable without government iniatives such as quotas for biobased plastics and bans on certain petrochemical products.