Companies are acting more cautiously than ever, but even so, confidence remains high that demand for film can only increase, with sustainability concerns playing to the sector’s strengths
The BOPP film industry is facing a number of challenges creating significant trading turbulence – resin price fluctuations, trade tariffs, trade barriers and currency shocks all affect working capital and business planning. Companies are acting more cautiously than in previous years in the face of this economic turbulence and financial risk. The Covid-19 pandemic has exacerbated this, with disruption to raw materials supply and distribution logistics.
Even amid this multitude of factors, the BOPP film industry has seen an improvement in margins overall since its low point of two years ago thanks to a reduction in overcapacity and better raw materials prices.
Investment in capacity continues. While for much of the 21st century the main focus of investment has been in China, the fastest growth in investment in recent years has been in India. India has seen capacity nearly double over the past five years, driven by the opening up of its retail sector, growth of the middle class and associated consumer spending on packaged food and other goods. Recent BOPP investments are in large, high-speed lines, averaging more than 45,000 tonnes/year nameplate capacity. The report provides detailed insight into these investments around the world, and the utilisation rates each year as this new capacity comes on stream.
Sustainability is the biggest story of the past two years, according to AMI’s detailed research across global BOPP suppliers. Downgauging continues, and recyclability is key to future business planning in every region. However, huge disparities exist between regions in terms of concrete actions addressing recycling and sustainability goals which can directly affect BOPP producers.
AMI research finds Europe and North America are most advanced in sustainability, with the implication that enterprises who export to these regions need to adapt and innovate to trade effectively in the future. Simpler films are now perceived to be advantageous and many BOPP suppliers are capitalis amid growing negative consumer sentiment towards plastics in general.
Large manufacturers are making acquisitions. At the same time, Western markets continue to be challenged by cheap imports, a higher volume of international trade and consolidation. Demand for BOPP film continues on a growth trajectory, given its important role in primary food packaging and its core functional characteristic as cost-effective barrier protection. Packaged foods are largely recession-proof, and will continue to be a key driver for future demand.
This is particularly so in emerging markets experiencing population growth, urbanisation and rising incomes. The five- year compound annual volume growth rate for the global BOPP film market 2014-2019 was 4.6%, which added just over 1.5 million tonnes of demand and increased the global market to more than nine million tonnes.
ECommerce is expected to continue expanding share over traditional retail channels, resulting in rising demand for tapes and label films.
AMI is forecasting continued advancement, at around 4%/year to 2024 giving rise to global demand of over 11 million tonnes.