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PLA remains competitive against low oil prices – NatureWorks’ CEO Marc Verbruggen

NatureWorks, Marc Verbruggen
GLOBAL - Even with the price of oil hovering around $30 a barrel, PLA can remain very cost competitive, according to NatureWorks’ CEO Marc Verbruggen, speaking exclusively to Editor, Trina Tan.

“I would prefer a world where oil prices are much higher, but we are still very much alive and growing in a time when oil is $30 a barrel and that has everything to do with how cost competitive you can make PLA," said Verbruggen speaking on the sidelines of the recent Natureworks’ conference, Innovation Takes Root 2016, in Orlando, FL, USA.

According to Verbruggen, NatureWork’s real value proposition was never about being greener than conventional plastic: “Mckinsey did a study for us long ago, and it was all about the economics - at that time, nobody talked about carbon footprint. In those days oil was $20 a barrel and we believed that we could make the economics work. So clearly we didn’t develop PLA on the basis that we were going to be the “green polymer”.

“We have been able to move beyond the environmental green flag and seriously invested in making sure our material can compete with others; so it’s no longer just a case of having green credentials, but being able to say that as a normal plastic, PLA is a serious alternative and not just something you use when you want to win over some consumers”

“Of course I would rather sell product at $1 a pound, than at $0.65 or $0.75 a pound, but if I have to, I can fight for market share and applications thanks to my intrinsic cost structure!” Verbruggen would not be quite so confident if corn - if the main feedstock for PLA were selling at $7-8 a bushel compared to oil at $30 a barrel, but it isn’t: “The farmers don’t like it, but if you look at corn futures, or for that matter, sugar futures, the expectation is that the price of corn and sugar will remain low – that is very helpful in maintaining competitiveness”.

The sugar-to-polymer conversion yield NatureWorks achieves is in the range of 1.25 kg of sugar to 1 kg of PLA polymer which ultimately determines the cost competitiveness of the product.

“Our PLA yield of 1.25 is very important; it means PLA can still compete against the polystyrenes of this world when oil is $30-40 a barrel,” said Verbruggen, adding “Oil prices are low, but corn is lower!”

For the full text of our interview with NatureWorks’ CEO Marc Verbruggen see the May Issue of our subscription-based newsletter Packaging Business Insight Asia:

NatureWorks, Marc Verbruggen
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