Global growth in 7.4 million tonne BOPP film market above that of GDP: report
Led by demand in Asia, global consumption of bi-oriented polypropylene (BOPP) films has averaged 6.2% growth per year over the last five years – almost twice average global GDP growth – and this trend will continue, according to a new report.
The report, by market research firm PCI Films Consulting Ltd. , identifies a series of factors driving global BOPP film volume growth, including higher sales of packaged food, stimulated by the growth in multiple food retailing and higher personal disposable incomes; growth in convenience foods packaged in BOPP films such as fruit and vegetables, salads, snacks and confectionery; the substitution of other flexible packaging materials such as BOPET, BOPA and other speciality films, speciality coated and label papers and aluminium foils; investment in new converting and packaging equipment allowing BOPP film to be used in a larger number of applications; and environmental legislation which has pushed rigid packaging formats towards flexible packaging.
But this demand is definitely not shared evenly around the globe. “While demand growth in mature BOPP film markets, such as Western Europe, North America and Japan has been lacklustre, demand in emerging markets such as China and India continues to grow strongly while new markets, such as Vietnam and Myanmar, have seen rapid expansion in their domestic flexible packaging industries,” the report said.
Indeed, the expansion in the Chinese BOPP film industry is the single biggest development in BOPP films over the past five years. “The numbers often beggar belief and despite numerous industry conferences held in China to slow investment and inform prospective investors of the threats of oversupply, rapid growth continues,” the report said. “Since 2000, the Chinese BOPP film industry has expanded 10-fold, 4 million tonnes of capacity, accounting for 57% of all installations of new film extrusion capacity globally.”
Along with Asian growth in demand has been an increase in merger & acquisition activity in the supplier base, and the report highlighted several recent notable transactions: Jindal Poly Films’ purchase of ExxonMobil’s European and US BOPP film assets; Taghleef Industries purchase of the Spanish speciality producer Derprosa; Biaxplen’s consolidation in the Russian industry; and Amtopp’s purchase of the Vifan and Uniscite facilities in North America.
These M&A’s notwithstanding, the report describes what it calls “the total lack of industry planning in plastic film production” that is hampering BOPP production. “Undoubtedly there are opportunities to source large quantities of commodity film from some Chinese producers, with one producer alone soon able to supply the entire US market’s annual needs twice over. However, the commercial terms demanded by a Chinese supplier may make doing business practically impossible,” the report said. “It is little wonder, then, that the industry is suffering from low margins and underutilised capacity.”
For more on the report, click on this link.