CICC: Policy promotes the development of the biodegradable plastics industry, PBAT capacity utilization rate is low

According to the Zhitong Finance APP, China International Capital Corporation (CICC) released a research report stating that since the National Development and Reform Commission and the Ministry of Ecology and Environment issued the "Opinions on Further Strengthening Plastic Pollution Control" in 2020, various provinces/regions or industries have successively released relevant implementation opinions, plans, or measures for plastic pollution control. If the relevant policies are implemented, it is expected to drive a rapid increase in the demand for related biodegradable materials such as biodegradable plastics. As of September 21, 2025, the market average price of PBAT is 9,850 yuan/ton, at a historical low. The average operating rates of raw materials BDO, PTA, and AA in August are 45%/74%/53%, respectively. It is expected that in the short term, PBAT prices will continue to maintain a slight fluctuation at the bottom, mainly supported by costs. CICC's main viewpoints are as follows: Policy Drives the Development of the Biodegradable Plastic Industry Since the National Development and Reform Commission and the Ministry of Ecology and Environment issued the "Opinions on Further Strengthening Plastic Pollution Control" in 2020, various provinces/regions or industries have successively released relevant implementation opinions, plans, or measures for plastic pollution control. If the relevant policies are implemented, it is expected to drive a rapid increase in the demand for related biodegradable materials such as biodegradable plastics. CICC believes that biodegradable films and express packaging may become the main expansion directions for biodegradable plastic applications in the future. Low PBAT Capacity Utilization Rate, Prices at Historical Low According to Baichuan Yingfu, the PBAT capacity in 2024 is 1.37 million tons, with a CAGR of 53% from 2021 to 2024. Due to demand being lower than expected, the average operating rate of PBAT in 2025 is 15.8%. As of September 21, 2025, the market average price of PBAT is 9,850 yuan/ton, at a historical low. The average operating rates of raw materials BDO, PTA, and AA in August are 45%/74%/53%, respectively. It is expected that in the short term, PBAT prices will continue to maintain a slight fluctuation at the bottom, mainly supported by costs. Short-term Market Supply and Demand Disturbance for PLA, Product Prices Under Pressure In the first half of 2025, due to the impact of tariff policies, the export of PLA downstream products has been significantly affected. Due to the under-execution of plastic bans and consumption downgrade, traditional application areas of PLA such as straws and disposable utensils have also seen a slight decline. According to Baichuan Yingfu data, the market average price of PLA has continued to decline since 2021. As of September 21, 2025, the market average price of PLA remains stable at 17,200 yuan/ton, down 1.7% from the beginning of the year and down 42.7% from the peak in 2021. Target Companies Related companies in the biodegradable plastic industry chain include PBAT: KINGFA (600143.SH), Changhong Gaoke (605008.SH), Hengli Petrochemical (600346.SH); PLA: Haizheng Shengcai (688203.SH), Jindan Technology (300829.SZ), Lianhong Xinke (003022.SZ); raw material adipic acid: Hualu Hengsheng (600426.SH) and Huafeng Chemical (002064.SZ), BDO: Sanwei Co., Ltd. (603033.SH) and Zhongtai Chemical (002092.SZ) Risk Factors Policy implementation is below expectations, and product prices continue to decline