Slack global demand and a lack of new investment has created a challenging market for BOPET film, a $12.5 billion industry dominated by suppliers in China and India, claims a report by PCI Wood Mackenzie.
The ‘BOPET Film Global Supply Demand Report’ found that demand reached 4.7 million tonnes in 2017, with 3 million tonnes of that from China alone. This resulted in growth of 7.4 per cent per annum. The company predicts that the market’s compound annual growth rate (CAGR) will relax to 5.7 per cent, leading to demand of only 6.3 million tonnes by 2022. Any excess production will, therefore, soon be filled, says the report.
Robert Gilfillian, a research analyst at PCI Wood Mackenzie, suggested that investment over the last decade in China has caused a surplus of supply, while markets outside of the region are relatively balanced. “Even Chinese supplies will gradually tighten as there is a lack of new investment, which will result in a more balanced market in the future. Plans for new capacity, ready to be commissioned by 2020, are already in place but more is needed,” he said.
The report claims that over-investment and reduced domestic demand growth are the main reasons why Chinese suppliers have suffered, with some producers having also had to shut down plants. The growth of Indian producers has also increased over the last five years, making the total contribution of both countries to global output over half of the total. The BOPET market will expect to see China and India influencing the 2020 capacity expansion plans.
Global demand for thin commodity BOPET films by the flexible packaging sector is forecast to push growth at CAGR of 6.4 per cent per annum over the next five years, compared to only 3.2 per cent growth in the thick film market, says the company.