Canadian Packaging

BOPP plastic film growth twice global GDP

And, with a growth of 6.2% annually, it's still not a new phenomenon for the 7.4 million tonne BOPP film market.


May 25, 2015
by Canadian Packaging staff

In the past five years average CAGR (compound annual growth rate) growth in global consumption of bi-oriented polypropylene (BOPP) films has averaged 6.2 percent, almost twice average global GDP (gross domestic product) 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 Ltd.’s latest review of global BOPP film market trends.

PCI 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 (Biaxially-oriented polyethylene terephthalate), BOPA (Biaxially Oriented PolyAmide) 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 applications;
  • Environmental legislation which has pushed rigid packaging formats towards flexible packaging.

Along with global growth in demand, there has been an increase in M&A activity in the supplier base with several recent notable transactions:

  • Jindal Poly Films’ purchase of ExxonMobil’s European and U.S. BOPP film assets;
  • Taghleef Industries purchase of the Spanish specialty producer Derprosa;
  • Biaxplen’s consolidation in the Russian industry, and;
  • Amtopp’s purchase of the Vifan and Uniscite facilities in North America.

But the big story of the past five years continues to be the expansion in the Chinese BOPP film industry.

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.

Since 2000 the Chinese BOPP film industry has expanded 10-fold, to four million tonnes of capacity, accounting for 57 per cent 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. It is little wonder then that the industry is suffering from low margins and underutilized capacity.

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 U.S. 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.

Further details can be found HERE.

About PCI
PCI Films Consulting Ltd, part of the PCI group of companies, offers an extensive range of consulting services to those involved in the production and use of flexible packaging materials around the world. The company produces dedicated quarterly business reports and in depth regional supply/demand studies for the polyester and polypropylene film and flexible packaging markets. The company also provides specialist ad-hoc research and planning to the industry and its advisers. Company information may be found at www.pcifilms.com.


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