PCI Films Issues Study of BOPP Film Market

NORTHAMPTONSHIRE, UK | PCI Films Consulting has issued a reported entitled World BOPP Film Market Trends to 2019.

In the last five years average compound annual growth rate growth in global consumption of bioriented polypropylene (BOPP) films has averaged 6.2%, almost twice average global GDP growth. Bucking global recessions and economic downturns is not a new phenomenon for the BOPP film industry, but this trend seems set to continue, according to PCI Films Consulting’s latest review of global BOPP film market trends.

PCI’s managing director Simon King says, “While demand growth in mature BOPP film markets, such as Western Europe, North America, and Japan has been lackluster, 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 following factors have been identified by PCI as having driven global BOPP film volume growth:

• 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 specialty films, specialty coated and label papers, and aluminum foils

• Investment in new converting and packaging equipment allowing BOPP film to be used in a larger number of application

• Environmental legislation which has pushed rigid packaging formats towards flexible packaging.

Along with global growth in demand has been an increase in M&A activity in the supplier base, with several recent notable transactions: the Jindal Poly Films purchase of the ExxonMobil European and US BOPP film assets; the Taghleef Industries purchase of the Spanish specialty producer Derprosa; the Biaxplen consolidation in the Russian industry; and the Amtopp purchase of the Vifan (http://www.viamfilms.com) and Uniscite facilities in North America.

But the big story of the last five years continues to be the expansion in the Chinese BOPP film industry, says the report. The numbers often defy belief and despite numerous industry conferences held in China to slow investment and inform prospective investors of the threats of oversupply, rapid growth continues.

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. Illustrating the total lack of industry planning in plastic film production, domestic consumption of BOPP film in China has only grown by 2.8 million tonnes over the same period, with exports only expanding by 100,000 tonnes. This, says the report, is why the industry is suffering from low margins and underutilized capacity.

Undoubtedly, adds the study, 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.

It is because of this uncertainty in the long term security of some Chinese sources that PCI strongly recommends the use of local sourcing partners to help reduce these risks.

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