The buzz at the ICDC downstream chemical conference held in Mumbai on 29 and 30 January 2015 and\u00a0jointly organised by Tecnon OrbiChem and Elite ++\u00a0 in the first session of Day 2 is all about alternative feedstocks, including Biomaterials. \u00a0All these discussions are taking place under the cloud of low crude oil prices, which have fallen about 40% since OPEC decided not to curtail production in late November 2014. \u00a0On 28 January, the WTI price was $44.45\/bbl.<\/p>\n
Can bio-materials be viable with the current $50 price of crude oil? Will new bio-based projects survive the low-cost crude environment? What are the factors that can allow the bio-materials industry to flourish?<\/p>\n
Mukund Rao of BioAmber, speaking on the sidelines of the conference commented that the company\u2019s bio-succinic acid prices should not fall at the same rate as those for petroleum-based succinic acid prices, which are falling with the price of crude oil. \u00a0 Rao was keen to comment that bio-materials should be based on commercial viability and should be able to compete in the petrochemical market: There should be \u201cno mandate, no subsidies; differentiation is key.\u201d<\/p>\n
But all markets are not created equal when it comes to potential for differentiation. The Indian market presents a lot of challenges in taking bio-based materials to the market as, overall, buyers are quite sensitive to price.\u00a0 This is also true of China and other developing or emerging economies in Asia and elsewhere.<\/p>\n
So how competitive can bio-chemicals be in the current market? What is the petrochemical context in this brave new crude oil world?<\/p>\n
If we take the example of maleic anhydride, feedstocks here have dropped from $1600\/ton fob China Main Port in October to $1000\/ton in January 2015. \u00a0This sharp fall in the cost of maleic anhyride has implications for the price of downstream succinic acid,, currently priced at around $2000\/ton. \u00a0The lower cost of benzene feedstock for maleic anhydride in China has had a knock-on effect on maleic anhydride and related products, including succinic acid.\u00a0 Following the lead from crude oil, benzene prices in China dropped about $300\/ton in one month.\u00a0 Downstream prices are almost certain to follow these feedstock cost leads and maleic and succinic were no exceptions.<\/p>\n
And it\u2019s not just a pure cost issue; once lower benzene prices were seen, higher cost, usually uncompetitive benzene plants in China started to run again, creating a surplus of product on the market that adds to downward price pressure downstream.<\/p>\n
Another concern that was voiced during the conference\u00a0was efficiency in biomaterials production, not just because of actual feedstock costs but also \u00a0due to the challenge of being carbon efficient when operating, as most biomaterials plants do, at a small scale. \u00a0At the same time, there are larger scale plants coming up, including bio Succinic in Sarnia Ontario starting up this year and for 2017, BioAmber hopes to bring up a world scale bio-succinic acid plant with a capacity of 70ktpa and 100ktpa of BDO.<\/p>\n
BioAmber also argues that glucose-based feedstocks insulate downstream buyers from price volatility seen in the crude oil market.<\/p>\n
There is some encouragement from the home and personal care sector where oleochemicals already make up an estimated 50% of the feedstocks for these products and where customers are demanding \u201csafe\u201d products, which are free-from parabens and are green and mild, according to Shrikant Waghode of Croda India.<\/p>\n
The short answer to the question, \u201ccan bio-materials compete with petrochemicals when crude oil is around $50\/bbl\u201d is, \u201cno.\u201d \u00a0However, differentiation may be able to mitigate this to some extent.\u00a0 And\u00a0the bio-materials industry can take some\u00a0comfort from the growing\u00a0recognition amongst consumers around the world\u00a0that crude oil, while cheap in the short term, may cost us more than we are willing to pay in environmental terms sooner than we might care to think.<\/p>\n","protected":false},"excerpt":{"rendered":"
The buzz at the ICDC downstream chemical conference held in Mumbai on 29 and 30 January 2015 and\u00a0jointly organised by Tecnon OrbiChem and Elite ++\u00a0 in the first session of Day 2 is all about alternative feedstocks, including Biomaterials. \u00a0All these discussions are taking place under the cloud of low crude oil prices, which have […]<\/p>\n","protected":false},"author":59,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_seopress_robots_primary_cat":"","nova_meta_subtitle":"","footnotes":""},"categories":[5572],"tags":[],"supplier":[1180,9116,9117,6996],"class_list":["post-24320","post","type-post","status-publish","format-standard","hentry","category-bio-based","supplier-bioamber-inc","supplier-croda-india","supplier-opec","supplier-tecnon-orbichem"],"_links":{"self":[{"href":"https:\/\/renewable-carbon.eu\/news\/wp-json\/wp\/v2\/posts\/24320","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/renewable-carbon.eu\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/renewable-carbon.eu\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/renewable-carbon.eu\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/renewable-carbon.eu\/news\/wp-json\/wp\/v2\/comments?post=24320"}],"version-history":[{"count":0,"href":"https:\/\/renewable-carbon.eu\/news\/wp-json\/wp\/v2\/posts\/24320\/revisions"}],"wp:attachment":[{"href":"https:\/\/renewable-carbon.eu\/news\/wp-json\/wp\/v2\/media?parent=24320"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/renewable-carbon.eu\/news\/wp-json\/wp\/v2\/categories?post=24320"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/renewable-carbon.eu\/news\/wp-json\/wp\/v2\/tags?post=24320"},{"taxonomy":"supplier","embeddable":true,"href":"https:\/\/renewable-carbon.eu\/news\/wp-json\/wp\/v2\/supplier?post=24320"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}