Demand for - and supply of - bi-oriented polypropylene (BOPP) film is set to see strongest growth in nations such as Dubai, India and China as the current order in the sector swings from West to East, says the report World BOPP Film Market Trends 2008 by PCI Films Consulting.
Emergence of Middle East
The study concludes the Middle Eastern BOPP segment is expected “to emerge as a significant regional production centre in the future, doubling its size in the next three years”. A major factor in this expansion is support by governments in the region to downstream industries which are seen as adding value to oil assets. PP resin production, film extrusion, flexible packaging and food processing are all industries targeted for expansion in the region, said the report.
“Middle Eastern BOPP film producers are confident of strong regional demand growth from flexible packaging customers and increased opportunities to export volume based on their lower costs of production,” said report author Simon King.
The report predicts that between 2009-2014 there will be a “strategic shift in the balance of power away from the traditional suppliers of BOPP film”. Previous market leaders such as Treofan and ExxonMobil, have already had to make room for new players such as Dubai-based Taghleef Industries and others emerging in India and China. In the last five years, Taghleef has invested in new low-cost equipment and also bought regionally based assets such as Radici Film, to emerge as one of the world’s largest BOPP film producers with a world-wide network of supply.
Demand
The Central and East Asian region, which includes South Korea, Japan and China, is now the world’s largest producer and consumer of BOPP films accounting for 46 per cent of demand and capacity.
The world BOPP film industry has expanded by 60 per cent since 2003 with China commissioning the majority of new capacity.
In 2008, while Asia saw demand grow by 7 per cent, BOPP volume demand in Western Europe shrunk by 3.1 per cent. Rising oil and resin prices in H1 2008, saw Western European demand hit 781,000 tonnes. However, as oil prices collapsed in H2, buyers ran down film stocks which served to dampen demand.
“With the world economy entering a recession at the same time, BOPP film producers found the extra volume gained earlier in the year was more than matched by reduced demand in the second half,” said the report.
Demand in other Western regions, particularly Eastern Europe, held up more strongly thanks to investment in retailing, food processing and new converting equipment. North America experienced a 3 per cent growth in demand in 2008, owing to the buoyant Mexican market, whereas demand in Central and South America remained relatively stable.
In South East Asia, especially India, growth was stimulated by increased availability of film. Chinese supply and demand became more balanced during the year, allowing suppliers to plan further expansion of the annual 1.8m tonne market, said the study.
Future growth
Global 5-year BOPP film demand forecasts predict average world growth of 5.7 per cent with Asia continuing as the powerhouse while mature markets continue to slow down.
The report tables a conservative forecast that shows world demand for BOPP films will continue to grow by an average of 5.7 per cent per annum to reach 6.75 million tonnes by 2013. Growth in Asian demand is expected to account for nearly three-quarters of world growth over the next five years.
In the next five years, an additional 2.3 million tonnes of new BOPP film capacity is expected to be commissioned, expanding the industry by a third, which will result in the Top 20 World Producer rankings looking very different to that of today, said the report.