As of July 2024, the global average spot price of PBAT (polybutylene adipate/terephthalate) was quoted at $1,480/tonne, plummeting 32% from the beginning of the year, and breaking through the psychological barrier of $1,500 for the first time. This price has been close to the industry average cost line of $1,350/ton, marking the biodegradable materials industry has entered a brutal reshuffle stage.
Three major drivers of price dive
Overcapacity: China’s new production capacity reaches 2.1 million tons/year (68% of the global share)
Impact of new EU regulations: delayed certification of EN13432 leads to stockpile buildup
Raw material BDO price cuts: price of 1,4-butanediol, the key monomer, cuts to pieces
Capacity Landscape Reconfiguration: Who’s Leading the Price War?
China’s Top 5 (2024Q2 data)
Company Capacity (t) Cost ($/t) Strategy
Blonde Gold Technology 45 1,310 Share-preserving price cuts
Wanhua Chemical 38 1,290 High-end differentiation
Hengli Petrochemicals 30 1,350 Export subsidies
Tongcheng Xinmai 25 1,410 Switching to PBS
Xinjiang Lanshan 20 1,520 Production cut by 40% already
EU Certification Crisis: $200 Million Orders Pending
Certification Necklace Status
Testing Backlog: TÜV and other organizations have been queuing up samples to be tested for more than 4 months
Pass Rate Plummeting: Only 57% of products meet the standard under the new regulation (82% in 2023)
Financial Pressure: Cost of Single Certification Soars to $15,000 (Including Repeat Testing Fee)
Typical Enterprise Dilemma
Case: Jiangsu an exporter of 2,000 tons of PBAT film due to Certification delays:
Warehousing costs accumulated $85,000
Forced to sell at $1,250/ton (loss of $500,000)
Threat of technology substitution: the PHA downgrade strike
Cost gap closing fast
Indicator PBAT PHA gap
Price ($/tonne) 1,480 3,200 2.16x
Degradation cycle 180 days 90 days -50%
Capacity growth rate +12%/year +45%/year 33pct
Suggestions on Sourcing Strategy: Buyer’s Survival Guide
Best Sourcing Window Forecast
Short-term (2024Q3): can hoard at $1,400-1,450 range
Medium-term (2025Q1): may rebound to $1,700+ after implementation of the new EU regulations
Three Principles of Risk Avoidance
Avoid LTA: lock-in period suggested ≤3 months
Certification Bundle: require suppliers to provide pre-certification report
Hedging: BDO futures Hedging ratio is recommended to be 30%.
Industry Reshuffle Forecast: Survivor Characteristics
Types of enterprises expected to survive
Vertical integrators: self-produced BDO (e.g., Wanhua)
Technology leaders: with catalytic modification patents (e.g., Jinfa)
Niche specialists: focusing on medical/high-end film materials
Players about to leave the market
Single production capacity with cost > $1,450/ton
Export-dependent without EU certification
Small and medium-sized modification factories with tight financial chains
Emerging Threat: PHA Technology Substitution
As PBAT struggles with pricing and certification issues, alternative biodegradable materials are gaining traction. Polyhydroxyalkanoates (PHA) present a particularly compelling threat as the cost gap between the two materials narrows. While PHA remains more expensive at $3,200/ton compared to PBAT’s $1,480/ton, it offers significant advantages including a 50% faster degradation cycle (90 days versus 180 days for PBAT) and dramatically higher capacity growth rate of 45% per year compared to PBAT’s 12%. These advantages are making PHA increasingly attractive to manufacturers and buyers seeking more reliable certification pathways and superior performance characteristics.
Strategic Sourcing Recommendations: Navigating the Turbulent Market
For buyers navigating this volatile market, several strategies can help minimize risk and capitalize on opportunities. Regarding timing, the short-term window (2024 Q3) presents opportunities to stockpile at favorable prices in the $1,400-1,450 range, while the medium-term outlook (2025 Q1) suggests potential price rebounds to $1,700+ following implementation of new EU regulations. Buyers should adhere to three key risk avoidance principles: avoid long-term agreements with lock-in periods exceeding three months; insist on certification bundles requiring suppliers to provide pre-certification reports; and implement hedging strategies using BDO futures with a recommended coverage ratio of 30%.
Industry Reshuffle Forecast: Identifying Future Survivors
The current market turmoil will likely separate industry survivors from those destined to exit the market. Companies best positioned to weather the storm include vertical integrators that self-produce BDO (such as Wanhua), technology leaders holding catalytic modification patents (like Kingfa), and niche specialists focused on medical and high-end film materials. Conversely, vulnerable players include single production capacity operators with costs exceeding $1,450/ton, export-dependent manufacturers without EU certification, and small-to-medium modification factories with tight financial constraints.
180-Day Survival Action Plan for Industry Participants
Manufacturers must take immediate decisive action to navigate the challenging environment. Critical steps include launching comprehensive cost audits targeting costs below $1,400/ton, selectively shutting down high-cost production lines, and applying for local government subsidies to stabilize employment. Traders should implement countermeasures including switching focus to non-certified markets in Southeast Asia, developing PBAT+PLA composite materials for hedging purposes, and establishing price early warning systems utilizing Platts data sources. These strategic moves will help industry participants survive the current downturn and position for the eventual market recovery.
ACTION LIST: 180-Day Survival Plan
Must-do for manufacturers
Immediately start cost audit (target <$1,400)
Selectively shut down high-cost production lines
Apply for local government subsidies to stabilize jobs
Trader’s countermeasures
Switch to non-certified markets in Southeast Asia
Develop PBAT+PLA composites for hedging
Set up a price early warning system (recommend Platts data source)
