2016 started with China at the forefront of the news, as its ‘One Belt, One Road’ (OBOR) policy and ‘Made in China 2025’ programme began to reveal themselves in concrete deals. The consummation of Chinese relations with India, Russia and Germany supported the country’s ambitions of growing economic globalisation and integration.
ChemChina’s securing of the US$1 billion purchase of machinery giant KraussMaffei was the perfect way for China to announce its intentions at the start of this year, while Sinopec completed a minority investment in Russian petrochemical giant Sibur.
Meanwhile, Zhejiang Xinyuangfang Plastic Company started a joint venture with Indian converter Delta Thermoformers.
As spring arrived across Europe and North America, IHS Chemical forecast long-term structural change in the chemical industry, as the collapse in oil prices and a shift in China towards domestic consumption starts to take effect.
IHS predicted a slow down in capacity additions, as producers shifted from organic investment to mergers and acquisitions, while China’s turn inward created opportunities for other low-cost regions to play a greater role in commodity production.
However, China is growing its influence as a key, low-cost provider of polyethylene, thanks to its production additions from coal-to-olefins technology. China is expected to add around 17m tonnes of PE/PP capacity during the next five years, which will drive further market volatility.
It has been another year of consolidation across the flexible packaging industry, with Japan’s Futamura Group swooping for the Cellophane business of Innovia Group early in 2016, while what remained of the latter was recently acquired in full by Canada’s CCL Industries.
This month Clondalkin Flexible Packaging, with headquarters in Amsterdam, The Netherlands and turnover of around €350 million ($365m), was sold to Egeria. That deal followed the sale of another Moorgate Capital client, British Polythene Industries, which completed in August on the sale of its UK, Belgium, The Netherlands, and North America operations to RPC Group. This marked RPC’s entry into the flexible packaging sector.
“With these milestone deals taking place in 2016, we are confident of more M&A activity in films and flexible packaging in 2017,” commented Moorgate Capital’s head of packaging M&A, Nicholas Mockett.
On the subject of the recent Innovia Group sale, Mockett referred to the company as a differentiated player in flexible packaging: “Although BOPP is not unique Innovia is unusual in using bubble technology, which results in superior quality films. Key market segments are tobacco and labels. In addition, Innovia adds value to the film resulting in sophisticated security applications including for polymer bank notes.”
There was also flexible deals for Schur Flexibles, which was bought by private equity firm Lindsay Goldberg, FIOMO, a flexible packaging foils and labels maker in the Czech Republic that was bought by Huhtamaki, and Amcor bought US flexibles converter Deluxe Packages, Hebei Qite Packaging from China, and BPI China.
It was not just flexible packaging keeping Amcor busy though, as the company also secured the assets of Sonoco’s global plastics blow moulding business.
It was another particularly challenging year for recycling in the UK, with Euro Closed Loop Recycling entering administration this summer, while EcoMachines Ventures planned to sell its share capital of Recycling Technologies to a private investor.
The site vacated by Euro Closed Loop Recycling was snapped up by recycling firm Veolia, with the latter saying that it will unlock the complete supply chain for producing plastics bottles from recycled material.
CK Group Recycling went into administration, while Evolve Polymers (formerly Eco Plastics) was sold by Aurelius to US-based Plastipak Packaging. Still in the UK, PlasRecycle’s company assets were put up for sale in the autumn after the recycler entered administration earlier this year.
One of the most interesting recycling acquisitions of the year was Borealis’ move into the sector with the purchase of German plastics recycler MTM Plastics GmbH and MTM Compact GmbH.
As Industry 4.0 continued to appear in all of its many guises — K’2016 was awash with references to it — the advanced use of automation and data exchange in manufacturing took centre stage for anyone interested in keeping up!
Beyond that, bioplastics continued to make strides in its various forms, digital printing captured the imagination of the masses, and edible packaging appealed to…well, probably the few. One thing is for certain: the plastics packaging industry is never dull. And with a backdrop of Brexit, Trump’s accession to the US presidential throne, Middle East chaos, and global economic uncertainty, the discussions through 2016 have been multifarious and wide-ranging.
What will 2017 bring? Hopefully, good fortune and prosperity for us all. We will find out together.