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US plastic film demand to rise 1.9% annually through 2016

US plastic film demand to rise 1.9% annually through 2016

14-Jan-13

US demand for plastic film is expected to grow 1.9% pa to 16 bln lbs in 2016, with a market value of US$19 bln. Expansion of the market will be fostered by an acceleration in economic growth and an increase in consumer spending, which will drive demand for film used in diverse applications such as retail sales, manufacturing and construction, as per Reportlinker. Advances will also be helped by an increase in the use of film in packaging, where it offers advantages in cost, performance and source reduction over other packaging materials. The versatility of plastic film increasingly allows for the downgauging of packaging, reducing the amount of material needed and lowering production and shipping costs, while maintaining desired characteristics. Although this expands the presence of plastic film in the market, it also reduces the volume of film needed, limiting growth.

Linear low density polyethylene (LLDPE) will remain the most widely used film, representing almost 50% of demand in 2016. Demand for LLDPE film is forecast to register strong advances through 2016. Due to its relatively low cost and versatility, LLDPE will see gains in diverse markets such as packaging for snack foods and produce, medical and pharmaceutical products, and stretch and shrink wraps. Conventional low density polyethylene (LDPE) will grow at a slower pace as it is supplanted by better performing LLDPE in many applications. High density polyethylene (HDPE) is expected to grow at an above average pace through 2016. Although constrained by slow growth in applications such as retail bags, HDPE film will exhibit gains in packaging for snack foods, baked goods and grain mill products. Demand for polypropylene film will also be above average through the forecast period, with packaging for snack foods, baked goods and grain mill products the leading applications. Polyethylene terephthalate (PET) film demand will remain essentially unchanged, with increases in packaging demand for snack foods, dairy products, and frozen food offset by the continued decline in demand for photographic and magnetic film. Polyvinyl chloride (PVC) film demand is expected to grow at a below average rate through 2016, primarily due to packaging for medical products and shrink wrap applications. Degradable plastic film will experience the fastest growth at more than 10% pa through 2016, driven by efforts to develop more sustainable and environmentally friendly products. Plastic film demand in non-food packaging is forecast to grow at the fastest rate of all film markets, driven by packaging for medical products and pharmaceuticals needed to care for an aging population. Solid growth is also expected for food packaging with the fastest gains in weight saving pouches for beverages, packaging for frozen foods and confections, and packages designed to extend the shelf life of produce and dairy. Non packaging applications will expand at a slightly below average rate, limited by slow growth in trash bags and other applications such as disposable diapers. Growth in secondary packaging will also be below average, constrained by efforts to reduce or eliminate the use of plastic retail bags.

Global plastic film and sheets market is forecast to reach 50.7 mln tons by 2015 driven by globalization, changing food consumption trends and increasing demand from developing markets of Asia-Pacific, Latin America, the Middle East and Eastern Europe, as per Global Industry Analysts, Inc. Low per capita consumption and rapid economic growth combine to propel the plastic film and sheets market in Asia-Pacific, with China and India at the vanguard of growth. North America, Japan and Western Europe represent mature markets with high levels of per capita consumption. In addition to Asia-Pacific, future growth is likely to be driven by Africa/Middle East, Latin America and Eastern European countries due to rapid industrialization, burgeoning consumer economy, improvements in the standard of living, and strong construction, food and beverage and consumer packaging sectors in these regions. Over the last decade, the Middle East has emerged as a serious player in the global plastics market owing to the twin benefits of low raw material and feedstock prices and proximity to the highly lucrative Asian market. This has led plastic players embarking on ambitious capacity enhancements in the region. Further, growing sophistication in the Russian market is paving way for uninterrupted growth in demand for plastic films in the region. Plastic films, mostly used for packaging of food as well as non-food items, witnessed slump during the recession as demand in most end-use markets plummeted. The decline was more pronounced across the non-food category as compared to the food segment owing to food being a highly inelastic product. Though the contraction in plastic films market spread across all segments, but polypropylene (PP) films fared better as compared to other segments owing to the relatively better performance from the Biaxially Oriented Polypropylene (BOPP) Films market.

Globally, the US, Europe, and Asia-Pacific represent the largest markets, collectively accounting for a major share of volume sales in the Plastic Film and Sheets market. Driven by enormous potential in China and India, Asia-Pacific is projected to be the fastest growing regional market with a CAGR of 4% over the analysis period. Segment-wise, polyethylene films represent the largest segment of the global demand. The segment is however ceding share due to increasing penetration of polypropylene into its hitherto established end-use markets. Within polyethylene segment, LDPE is losing share to its advanced form, linear low-density polyethylene (LLDPE) films. Market for HDPE film is also expanding at a consistent rate, though not as dynamic as LLDPE. Biaxially oriented polypropylene (BOPP) film, a sub-segment of polypropylene, represents the fastest growing segment in volume terms. Though the sector witnessed a slowdown in growth during the economic recession, particularly in 2008, the market bounced back quickly with a 3-4% growth rate in 2009. During 2010-2013, worldwide BOPP production capacity is estimated to expand by 2.2-2.4 mln tons, with the Middle East accounting for the bulk of the capacity expansion. High-performance plastic films have emerged as a niche segment in the huge plastic films industry. These films are generally sold at a higher price and are used for specific applications, where other types of films fail to provide the desired results. In Asia, the market is witnessing a tussle of supremacy between Japanese and South Korean polyethylene terephthalate (PET) films producers owing to robust growth in the segment, which is driven by Flat panel displays and packaging applications. Since the plastic films industry is characterized by product diversity, competition in the market remains fragmented with the presence of both large-scale manufacturers and small producers.

 
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