Costs and competitiveness

The InnoleicTM line products are obtained from the chemical modification of vegetable oils, mainly soybean oil, which is the main driver for our costs. Soybean oil prices are published and negotiated daily in the Chicago Board of Trade (CBOT), based mostly on supply and demand expectations. On the other hand, petroleum based products prices are highly influenced by the price of crude oil, that is determining for the prices of the main raw materials in the petrochemicals chain: xylene, propylene, phthalic anhydride, oxo-alcohols, etc.

The chart at the top shows an evolution of the prices of crude and soybean oil over the last years. As it is noted, the prices have a slight correlation, as both products are considered commodities in the financial market. But the dynamics differ from year to year, based on specific supply and demand variations for each product. There are other specific factors that influence the price of petroleum-based plasticizers, as imbalances in the market may prompt price variations exceeding the base crude oil variations. But, as a general driver, crude oil is a good predictor of traditional plasticizers prices.

The chart at the bottom indicates the competitiveness of our bio-based products when compared to petroleum. The chart shows the difference between soybean oil prices and Brent crude oil prices, where the lowest numbers indicate the better competitiveness for InnoleicTM products. The bar indicates the level where bio-based materials are at par with petroleum-based plasticizers. It is possible to note that, in the past decade, the competitiveness was affected only a few times (lines in red), and were associated with very low petroleum prices.

The price of grains and oils also tends to be more stable over time, as the dynamics are less affected by geo-political events and there is less concentration of suppliers. The supply can be affected by climate issues, but, in the past decades, as both North and South America produce the material with a large geographic distribution spanning thousands of miles, potential climate effects are attenuated.

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A brief description of market dynamics and the competitiveness of bio-based products