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BOPP Film Industry Report 2010- 2011

6 June 2011- Among all the packaging films, the BOPP films have always shown a favorable growth syndrome. In 2008, due to the economic downturn, the BOPP film industry suffered a setback but has fast recovered and has shown an encouraging growth in the demand for these films.

Growth Rate of BOPP Films Industry

Although the demand of BOPP films slowed down noticeably in 2008, it still managed to grow at a rate of two percent to reach a market demand of 51 million tones, and picked up again strongly by 6% in 2009, adding a further demand of 300 000 tonnes of BOPP films. The global demand for BOPP film is expected to grow at rates of six to seven percent per year for the next three to four years. And the growth factors of BOPP films will be driven mainly by the growth in Asia, and to a some extent in Eastern Europe, Russia and Brazil.

Future Prospects of BOPP Films Industry in 2011- 2012

In 2010, the global BOPP film demand had grown by 7%. However, the rate of new BOPP film lines coming on stream slowed notably due to the impact of the economic slowdown of the year 2008 on investment decisions. As soon as the financial crisis got over, there was seen a recovery in demand which resulted in a boom in orders for new BOPP film lines in the year 2010. This is expected to lead to another surge in new capacities in 2011 and 2012 and further pressure on BOPP margins. China is continuously leading the way in new capacity but many other regions have developed a good capacity too. These include countries like India and Russia.

Challenges for BOPP Films Industry

Due to the high growth rates, the BOPP film industry has become an attractive, profitable industry. However, in spite of the high barriers to entry, there appears to be no shortage of capital to fund new plants. This has resulted in an over investment that has further led to persistent oversupply, weak pricing and poor returns with an increasingly powerful and globalized customer base.

The growth of BOPP film industry is slowing down in the "so far good markets" of Western Europe, North America and Japan. This will present challenges to the BOPP producers in these regions where many old, slower and smaller BOPP film lines operate with higher costs. Although packaging innovation, raw material and technology developments still are somewhat driven by BOPP film manufacturers in these regions, the market growth, and more importantly converting operations are shifting to other lower cost regions of the world. This will have significant implications for the viability of BOPP film production in the western countries.