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Plastic Film Market Outlook Remains Positive Despite Short-Term Impact of COVID-19

Plastic Film Market Outlook Remains Positive Despite Short-Term Impact of COVID-19
Key market trends through 2024 include continued down-gauging by film producers, which will drive demand for multi-layer films, according to Freedonia Group analysts.

Plastic film is getting a lot of attention, as awareness grows of the need for safety in packaging. The U.S. stretch and film market, like the manufacturing sector overall, is seeing a major short-term impact, both in terms of sales and production during the ongoing pandemic, said the Freedonia Group’s latest study on the stretch and shrink film market.

Graphic courtesy Freedonia Group.

Opportunities and challenges for this sector caused by the pandemic include:

  • More than 60% of stretch and shrink film sales are for the storage, bundling, and transport of goods seeing heightened demand, including hygiene products, medical devices, and drugs.
  • Stretch and shrink film is also widely used to package e-commerce orders, which are rising as a result of shelter-in-place efforts, as well as grocery items, including meats, cheeses, dairy, bottled water, and frozen meals and vegetables.
  • Reduced manufacturing as a result of stay-at-home directives, which is shuttering production of items such as motor vehicles that are not considered essential, and an associated drop in shipping activity will restrain demand for stretch and shrink film.
  • The reduction in construction activity will limit demand for specialized films used in building construction and landscaping.

Despite these short-term disruptions, the trends outlined in the study seem to hold, and we are not anticipating a significant change in our long-term outlook, said Freedonia. Key market trends through 2024 include continued down-gauging by film producers, which will drive demand for multi-layer films. Multilayer films are increasingly favored, as they require less material to achieve required strength. Linear-low-density-PE-based multilayer stretch films for pallet unitization and bundling applications will offer the best opportunities because of increased demand for stronger, thinner films. Consequently, film manufacturers will continue to replace single- and three-layer film lines with five-layer lines.

Another key market trend, Freedonia noted, is shrink labels remaining one of the fastest growing product types through 2024. Shrink labels appeal to users because they are scuff resistant, conform tightly to a variety of shapes, and can be printed using a range of techniques and inks. Additionally, demand will be boosted by the development of new polyolefin-based shrink labels that can be more easily recycled along with PET bottles than PVC and PETG labels.

Flexible packaging superior to rigid packaging in reducing carbon footprint

A recently updated and extended study by the Institute of Energy and Environmental Research, commissioned by Flexible Packaging Europe (FPE), has underlined the original study’s findings, clearly showing that flexible packaging is a more effective route to resource efficiency and carbon-footprint reduction than rigid packaging formats or a singular focus on recycling.

The study posits a scenario in which all non-flexible packaging for fast-moving consumer goods (FMCG) are replaced with flexible packaging wherever possible. Carbonated drinks cannot be packaged this way, and so were excluded for the purpose of the study. The findings show that, by substituting all rigid packaging of non-beverage FMCG in the European Union, the amount of primary packaging waste could be reduced by 21 million tonnes per year. This would result in a 70% reduction of the total amount of non-beverage FMCG primary packaging in the EU.

The consequences on the environment are even more striking, said the updated study. By using a life cycle assessment (LCA) approach, the study shows that such a theoretical substitution would decrease total global warming potential (GWP) of all European non-beverage FMCG primary packaging by 33%, even if, for the purpose of the demonstration, no material recycling processes for flexible packaging were to take place. An opposite scenario — the substitution of all flexible packaging used for non-beverage FMCG by rigid packaging formats — would increase total GWP of the primary packaging to about 30%, the study shows.

The report’s authors conclude that for packaging the focus should not be solely on recyclability but also on waste prevention. This can be achieved, said the report, by greater use of flexible packaging, which would lead not only to less primary packaging waste but also to a lower carbon footprint and reduced use of resources.

Conversely, a focus only on recyclability and achieving recycling targets might lead to the substitution of flexible packaging solutions by more easily recyclable rigid packaging. However, the report noted, this approach would clearly be detrimental for climate change and resource efficiency, besides running counter to the objective enshrined in the EU Packaging and Packaging Waste Directive to prevent the production of packaging waste.

Commenting on the study, Jean-Paul Duquet, Director of Sustainability at FPE, said, “Prevention is on top of the waste hierarchy defined by the European Commission’s Waste Framework Directive, before other approaches like reuse, recycling, and energy recovery. The priority accorded to prevention before recycling is highly relevant for packaging, as this study demonstrates. Flexible packaging perfectly fulfills this prevention requirement and proves to be a major part of the solution to today’s challenges facing the packaging sector and the environment. Not to mention the important ongoing efforts to reach high recyclability performance and make flexible packaging even more resource efficient.”

Low-density PE market exhibits steady growth

Ceresana, a global market research institute specializing in chemicals, plastics, packaging, and industrial goods, also released a market study on polyethylene, one of the “top-selling standard plastics.” Its consumption continues to increase despite all environmental discussions, noted Ceresana. It is classified into different grades according to its density and the branching of its polymer chains: low-, linear-low-, and high-density PE.

Ceresana’s third comprehensive analysis of the world market for low-density polyethylene (LDPE) focuses on this material that has been produced since 1939. LDPE is soft, tough, and flexible, and is therefore used for numerous consumer goods. The most popular applications today are films that are used to produce carrier bags, pouches, packaging materials, and cover films for agriculture.

The current market study expects global LDPE revenues to grow by an average of 3.2% per year until 2026. One of the most dynamic growth markets is construction products. With a share of around 41%, the Asia-Pacific region is by far the largest consumer of LDPE.

The most important sales market for LDPE in 2018 was the packaging films application area with demand of 5.74 million tonnes. Overall, the packaging market accounts for 58% of demand. In terms of demand volume, construction presumably will achieve the highest percentage increase through 2026 with an average growth of 2.7% per year.

The most important method for processing LDPE is extrusion. In 2018, more than 13 million tonnes of LDPE were processed worldwide by film extrusion alone. The pipe, profile, and cable segment will achieve the highest percentage increase during the next eight years with growth of 2.5% annually, according to analysts at Ceresana.

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