US Biobased Products Industry: Economic Impact Analysis

paperinsight bioeconomyA detailed report commissioned by the USDA’s ‘BioPreferred® Program’, has been released. Some highlights are:

  • A conservative estimate of 40,000 bio-based products were sold in the USA in 2013 with an estimated value of $126 billion.
  • The bio-based industries contributed $369 billion to the US economy in 2013.
  • The bio-based products industry directly employed 1.5 million Americans in 2013.
  • The biobased products are currently displacing about 300 million gallons of petroleum per year – equivalent to taking 200,000 cars off the road.

The seven sectors considered to be involved the US bio-based products industry were:

  • Agriculture and Forestry
  • Bio-refining
  • Biobased Chemicals
  • Enzymes
  • Bioplastic Bottles & Packaging
  • Forest Products
  • Textiles

A good read for those interested in the bio-based economy and the future potential of bio-renewables.

For the full report, please click here

Why are IKEA and Apple buying up forests …. lots of forests?

paperinsight bioeconomyAn interesting article appeared in Gizmodo by Kelsey Campbell-Dollaghan giving a perspective on the interests of technology and retail companies in forests, driven by conservation and sustainability pressures and their drive to use renewable resources.

Recently, Ikea (83,000 acres) and Apple (36,000 acres) bought up significant tracts of forest with the intention of managing them as a renewable resource.

In a quote attributed to Apple’s Lisa Jackson, she states:
‘We are in the midst of one of the greatest land transfers in history. In the last 15 years, we’ve already lost 23 million acres of forestland that provided the pulp, paper, and solid wood material for products we all use. That’s roughly an area the size of Maine. As land continues to be sold and change hands at an alarming rate, an estimated 45 million more acres are currently in the crosshairs of development.’

Apple and IKEA are not alone in eyeing up (buying up) future sources of renewables which can be used in the production of energy, food products or products many of which were traditionally derived from fossil fuels such as oil, coal and gas.

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For more information on why companies are buying up forests, there is also an article in the Wall Street Journal concerning IKEA –> click here

Today, Germany celebrates a 625 year history of papermaking

paperinsight paper companiesThis morning, I noticed an article in ipw magazine stating that on June 24th (today), the German paper industry (VDP = Association of German Paper-manufacturers) celebrates a 625 year history. Many paper manufacturers will open their doors to mark this special event.

Congratulations and what a great idea to open doors and share what the industry does and contributes.

For the detailed ipw article, please click here.

Optical Brightening Agents for Papermaking – the supply and demand situation

paperinsight additive supplOptical brightening agents (OBAs) are used in large quantities to increase the brightness or whiteness of paper and board products and for details of what optical brigthening agents are and their raw material composition, please refer to an earlier blogpost.  Recently, there has been a number of changes in the market which have impacted on the supply and demand for these products.

Demand has been in a state of flux, with further consolidation in the industry and closure of paper mills in Europe and the USA countered by the increased demand in Asia and South America. When demand shifts to Asia and South America, there are different options for the sourcing of OBAs as there are strong regional manufacturers of the products which are usually more competitive than the European or international producers.

On the supply side, there have been three significant effects. First, the Chinese government has belatedly chosen to clamp down on the polluting producers of the diamond-stilbene (DAST) raw material and as China is the major producer (> 40%), removing a significant amount of DAST increased raw material prices significantly. The remaining DAST producers in India and elsewhere could not pick up the deficit and DAST prices increased from below $1.50 to over £5.00 only to fall back to  around $3.50. This supply shortfall is not too dissimilar to the situation that occurred before the Beijing Olympics when the Chinese government prevented a number of DAST and OBA manufacturers from producing in order to cut down on the pollution wafting over the Olympic sites.

Second, to compound things, exchange rates have been volatile – especially the devaluation of the Euro against the dollar.

Third, oil prices fell dramatically only to recover somewhat but it is unlikely that prices will return to the $100/barrel level in the near future.

So, what of the product producers? Those that were back integrated and produced DAST had some relief, and tried to take advantage of the situation, increasing DAST and OBA prices; however, the OBA market in Europe was saturated and there was little upward movement in pricing and this situation is likely to remain.

From a European perspective the situation is:

  • European manufacturers of OBA face much higher higher material costs but have lower product logistic costs.
  • As the raw materials are based on oil, the oil price fluctuations we have seen recently have reduced raw material costs although DASDA pricing is not entirely dependant on oil pricing.
  • Chinese, Indian and Indonesian manufacturers importing into Europe are having to either absorb the dollar and raw material increases or find a way to compete with current European pricing. Most paper mills look at the delivered cost of OBAs (DDP) and the supply chain costs from India or China are significant, even when importing companies ship powder OBAs and dilute them in Europe.
  • Chinese, Indian and Indonesian manufacturers do not offer the more innovative OBAs and are therefore competing with what are essentially ‘commodity’ OBAs.
  • The OBA market is very competitive and there are too many suppliers. Aside form the manufacturers, the market is further fragmented by European suppliers which source from India, China and Indonesia.  These suppliers are also subject to the same effects that their suppliers (importing manufacturers) are facing.
  • A number of importers seem to flout both REACH and patent compliance for short-term gain.
  • New entrants into the market seem to struggle with both the compliance and basic service requirements of their customers.

The outlook for price increases in the OBA market in Europe is bleak and the market will remain fragmented.  The question is how long all the players in the European OBA market will be able to live with very low margins – there will be some exiting the market in 2015/2016.

 

 

The Chelsea snip – time to tidy up your business?

IMG_1850As we approach the time of the Chelsea Flower Show the exhibitors are starting to get their show flowers and gardens into top shape for the judges and public.  Just before the show, the exhibits are looked over and attention given to detail, especially by those experts responsible for the fine pruning, and giving what was referred to on BBC Radio 2 the other day as the ‘Chelsea Snip’.

Why not take a moment to stand back and look at your business – are there any improvements which could be made? Could you fine-tune some areas? Could you improve your own performance? It sometimes helps to have a fresh pair of eyes and ears and if we can help, please contact us at Canda International. Whether you are a small or large business, a department, team or individual, we have a good track record of success in auditing what you do and helping to identify improvement opportunities.

To contact us, please click here.

New website – Canda International

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We are in the process of developing a new website.  Hopefully it will provide you with the information you need.  We intend to position ourselves as a premium provider of knowledge and information in our areas of expertise.