Page 50 - Winter2020

stable); it is affordable; and maybe most impor- percent of its capacity to meet global demand. Further, BPA is a solid
tant, it is clear or transparent when used alone and environmentally stable material, meaning that it is cheap (in rela-
or in other synthetic materials. The transparency tive terms) to transport around the world, with a variety of implications
of the material is likely the key advantage over for centralizing production and keeping regional price differences or
other substitutes in a visual society such as arbitrages stable in terms of trade volatility.
ours. This makes BPA an ideal building block Even though BPA is a by-product, the materials used to make BPA
for large water bottles (think water cooler at (acetone and phenol) are also by-products themselves and in most cases
work), beverage bottles (so you can see what in higher oversupply than the BPA itself. The typical price spread be-
you are drinking), baby bottles (you need to see tween BPA and the phenol and acetone needed to manufacture BPA is
the milk), electronics packaging (you need to relatively healthy and results in a profitability of two to three billion dol-
see your gadget) and as a liner to preserve food lars per year before fixed and variable costs. A healthy business model
that you may find in canned goods (no metallic or vested financial interest is nothing to sneeze at and leaves plenty of
aftertaste). capital to fund scientific research, marketing, lobbying and other support
The issue of affordability is probably industries necessary to preserve that primary source of wealth genera-
understated as to why BPA is so integral to tion—the price difference between BPA and the raw materials required
our packaging supply chain. Both phenol and to manufacture BPA.
acetone used to manufacture BPA are deriva- It should also be noted that the BPA production industry is fairly
tive chemicals, produced as by-products in the concentrated, with only about seven to ten true market participants glob-
manufacture of other synthetic materials, ally. The big players in the BPA game are Bayer, Dow Chemical, SABIC
namely the big four consumer plastics. Being a (Saudi Arabia Basic Chemicals), Dow, Momentive-Hexion Specialty
by-product has the distinct economic advantage Chemicals, Sinopec (China State Petrochemicals), Mitsubishi (Japan
of constant surplus production, because supply Conglomerate), Mitsui (Japan Conglomerate) and LG Chem (Korea
is determined by the big four basic plastics Chaebol). The heavy concentration of the industry and the homogeneity of
(low-density polyethylene, linear low-density the product are important in that it suggests that the main risk to industry
polyethylene, high-density polyethylene, and profitability is a change in public sentiment versus direct competition
polypropylene). As you produce more of the from a rival company.
big four, the by-products are produced whether
you need them or not and the situation for the HOW BPA DEGRADES
last thirty to forty years has been oversupply. Despite its engineered material stability, like many materials BPA is
When you have a material in chronic oversup- susceptible to the following degradation mechanisms: leaching, friability
ply, the best option is oftentimes to create new and thermal softening.
demand outlets.
If global demand is 6.5 million metric • Leaching: Put two materials in contact for a long period of time and
tonnes and production capacity stands at nine some molecules of material A are going to pass into material B and
million metric tonnes, the inference is that the vice versa. It may be a very small number of molecules but some
BPA industry needs only to utilize about 70 leaching will occur, with time in contact being the determining vari-

Figure 1: The Chemical Structure of BPA

48 Wise Traditions WINTER 2020