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Chinese demand for BOPP remains despite apparent over-capacity

October 5, 2006

2 Min Read
Chinese demand for BOPP remains despite apparent over-capacity

SIEGSDORF, Germany - Despite a lopsided supply-and-demand situation for biaxially oriented polypropylene (BOPP) films where world demand was 4.28 million tonnes last year but capacity stood at 5.76 million tonnes, market analyst Simon King—managing director of PCI Films Consulting Ltd. (Guilsborough, England)—said last week, ”Asia needs more BOPP film capacity–believe it or not!” while speaking at a film symposium conducted by processing equipment maker Brückner Group (Siegsdorf, Germany).

King says prices in China for BOPP film have already risen sharply in the last two months even as resin prices decrease. Some of this demand may be absorbed by BOPP imports from Thailand or Malaysia. ”The rest of the world is nicely positioned but will need more capacity in two to three years,” King says. He points to less demand for commodity films rather than specialist web such as for tobacco packaging, capacitors, and 5- to 7-layer coextruded products.

King sees slow market growth in Western Europe but demand is expected to accelerate in Eastern Europe in the coming years. In the Americas, he says BOPP is gaining ground against other substrates such as paper, aluminum foil, and other plastics films, but that the BOPP market remains over-supplied. Like Europe, demand in North America is slowing but there is presently strong ”but uncertain growth” in Central and South America.

China remains the largest Asian market for BOPP. There, commodity BOPP is commonly laminated to cast PP for packaging items like dried noodles. He says, however, that the Chinese themselves are starting to look at value-added applications such as capacitor films as replacements for cellulose used to package cigarettes. The demand growth rate of BOPP in Asia is now at 10%/yr.

In the future, King says India could play a more important role in the BOPP market if European producers decide to offshore activities to that country rather than China. He estimates that capacity utilization of European BOPP processing equipment is about 78% while Eastern European competitors are thought to run at only 55% and producers in the Middle East at about 64%.

In other oriented films, King sees bioriented polyester (BOPET) thin films moving from Western Europe toward China and India in the future while thick BOPET films for the electronics sector, which are more value-added and difficult to produce, stay in developed markets. He estimates the nylon films market (BOPA) will stagnate for the next three years, but there could be some growth for semi-rigid polystyrene (BOPS) targeting PVC-film replacement. Expected growth should also come from orienting biodegradable polylactic-acid polymer (BOPLA), but the market for this material is limited by the capacity of the one major player, NatureWorks, he says.—Robert Colvin; [email protected]

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