Business Conditions

Plastics are used for a variety of applications. Among these, low

cost and useful properties make PET particularly attractive. Conse-
quently, PET features in an extremely wide range of products,
including beverage bottles and other packaging materials, apparel,
and automobile interior materials. As of 2011, annual demand
worldwide for PET was 53.2 million tons, representing a market
worth approximately 8 trillion. Furthermore, demand from emerg-
ing countries is driving annual growth of about 8% in this market.
Meanwhile, because oil is the main raw material of PET and other
plastics, there is a pressing need for environment-friendly, plant-
derived plastics. Until recently, however, no one had developed a
bioplastic of sufficient quality to truly replace oil-derived plastics.
Providing Toyota with a New Solution
We have long had businesses that use plastic. Looking to expand
businesses while benefiting the environment, we actively explored
the feasibility of commercial bioplastic operations.
Through this initiative, we discovered that MEG derived from
sugarcane was being produced in India. Immediately, we studied
the production method, and submitted a proposal based on our
findings to our customer Toyota Motor Corporation. Aiming to
reduce CO
2
, Toyota has set a target of substituting 20% of the
plastic materials it uses with environment-friendly materials by
2015. Therefore, it was searching for a high-quality bioplastic
usable for automobile interiors. They were very interested in our
proposal, and we began joint development. At almost the same
time, Toyota Tsusho began building a Bio-PET supply chain.
Given the growing problems of global warming and oil resource depletion, businesses dealing with
oil-derived plastics are unlikely to be able to continue growing based on their present formats.
Therefore, with a strong sense of urgency, our Basic Chemicals and Plastics Department launched
an initiative to complete the worlds first Bio-PET* supply chain.
* Polyethylene terephthalate, which comprises 70% terephtalic acid and 30% monoethylene glycol (MEG) by weight. In Bio-PET, plant raw material is used as a
substitute for MEG.
Helping Customers Use Less Oil by Building
the Worlds First Bio-PET Supply Chain
Case 3
Bio-PET Business
FEATURE: DRIVING SYNERGIES
The Bio-PET Value Chain
Toyota Tsushos
functions
Stable
procurement
Production
at joint venture
Sales
Contract
manufacturing
Production
process
Managing company Petrobras Greencol Taiwan Corp. (joint venture) Textile manufacturers, food manufacturers PET manufacturers
Country / region reeegggio oonn Brazil Taiwan Japan, North America, Europe / Asia Asia
Sugarcane Bioethanol Bioethylene Bio-MEG Bio-PET
Terephtalic acid
Beverage bottles
Automobile
interior materials
Apparel
26
Leveraging Trading Company Capabilities to Build a Supply Chain
The most important task in order to ensure a stable supply of Bio-
PET was procuring raw materials. At Toyota Tsusho, we decided
that the best raw material was ethanol derived from sugarcane,
which does not destroy forests or compete with agricultural land
used for food crops. We chose as a suitable partner the part state-
owned, part private sector-owned Brazilian oil company Petroleo
Brasileiro S.A. (Petrobras). This company has operations on a scale
comparable to those of an international oil major. In 2010, we con-
cluded an offtake agreement with Petrobras worth approximately
70 billion for 1.4 million kiloliters of sugarcane-derived bioethanol
annually over the 10-year period from 2012.
This marked the beginning of the worlds first integrated Bio-
PET supply chain, spanning raw material procurement and
intermediary processing through to Bio-PET production and sales.
To ensure the production of the intermediate material Bio-MEG
with stable quality, in October 2010 we established a joint venture
with a Taiwanese company that manufactures oil-derived MEG for
us and in which we hold a 50% stake. This joint venture will supply
Bio-MEG to PET manufacturers in Asia, who will produce finished
PET products. As Bio-PET can be produced with the same facilities
as those used for oil-derived PET, manufacturers were able to
change over to producing acceptably priced Bio-PET that matches
the quality of conventional PET.
From fiscal 2012, we plan to produce and sell 200,000 tons of
Bio-PET annually. As well as supplying it to Toyota for use in the
interiors of some of its automobile models, we supply it to major
textile manufacturers and food manufacturers through collabora-
tion with other divisions. Finished product manufacturers are
finding Bio-PET relatively easy to introduce and its adoption is
spreading because it offers the same quality and functionality as
traditional oil-derived PET.
As of 2011, demand for Bio-PET was 150,000
tons, approximately 24 billion, representing
0.3% of total PET demand. However, as the
emphasis on environment-friendly products in-
creases, this is projected to grow to around 5%
of demand, which is 3.4 million tons, or ap-
proximately 400 billion. Toyota Tsusho is
targeting annual production and sales of 1 mil-
lion tons by 2015.
Although competition may become fiercer
as the market expands, we will adopt strategies
that take full advantage of the lead we are
building in this market. One such strategy is
a groundbreaking initiative for business-to-
business products that involves the creation of
a Toyota Tsusho Bio-PET brand. Through col-
laboration with the manufacturers we supply,
we plan to roll out GLOBIO as a PET brand that
adds value by guaranteeing production pro-
cesses use 30% bio-materials. Also, we intend
to become involved in bioethanol production in
order to extend our value chain even further.
In addition, we will accelerate efforts to
eliminate plastics that use oil resources. One
example is our PET recycling business. Another
is our participation in R&D aimed at creating
100% plant-derived PET by substituting tere-
phtalic acid with bio-materials. While expanding
operations and providing customers with
diverse solutions, we will move forward deci-
sively toward realizing a low-carbon society.
Extending and Broadening the Bio-PET Value Chain Further
http://globio.jp.studiois.co.jp/en/index.html
Bio-PET Demand Forecast
(ton thousand)
11
(Result)
12 13
150
250
400
3,400
15
Bio-PET Oil-derived PET
* Toyota Tsusho Corporations forecast
Shigeru Okumura
Project Manager
Basic Chemicals and Plastics Department
General Manager
27