Oil majors’ growth plan for plastics market faces challenge from bioplastics firms

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Companies that make packaging from plants instead of fossil fuels are starting to challenge the oil industry’s ambition to increase the supply of raw materials for plastics, Bloomberg reports.

Use of bioplastics made from sugar cane, wood and corn will grow at least 50 percent in the next five years, according to the European Bioplastics Association in Berlin, whose members include Cargill Inc and Mitsubishi Chemical Holdings Corporation. German chemical giant BASF SE and the Finnish paper maker Stora Enso Oyj have already stepped into the business to meet demand from the likes of Coca-Cola Co. to Lego A/S. Bioplastics currently make up about 1 percent of the plastics market.

Oil companies make ethylene and other basic building blocks for plastic. The International Energy Agency says growth in the plastics market should boost petroleum demand. Saudi Aramco, Exxon Mobil, Royal Dutch Shell and Total SA are currently expanding their plastic footprints. The new technology will however have to compete against massive refineries that convert hundreds of thousands of barrels of oil every day into plastics. Demand for bioplastics also needs to grow among retailers and consumers, according to Coke.