China currently consumes over 7 million tons of Polyethylene film, making it the largest consumer in the World. Consumption in China at the beginning of 1991 was only about 1 million ton, hence all this growth has come essentially in the last two decades.
The market is being driven by growing domestic demand for products from a spectrum of sectors such as agricultural films, building films, industrial and consumer packaging, and by the production of converted bags and sacks for export markets. China is the world's largest market for agricultural films, accounting for over 20% of PE used globally in agricultural film in 2004. The market is expected to continue to grow in line with GDP at an average rate of 7% pa, as China strives to improve productivity and output of agricultural produce to feed its large population.

The market has also witnessed introduction of newer applications in China such as stretch film and technical co extrusions. These applications have been identified as strong growth sectors, but remain small in the overall context of PE film production, which is projected to continue growing at over 7% in the coming few years.  
The development of newer applications will bring changes in the material selection for film extrusion as demand for higher alpha olefins and metallocenes begins to develop. These materials, currently imported, represent only 2% of the market in China for 2004 but are expected to growth strongly over the next five years, particularly for octene (C8) and metallocene types. Their increasing demand is driven by increased investment in production of stretch film and other new applications and by improved availability. Butene (C4) grades of LLDPE are the main type of polyethylene resin used by Chinese film extruders thanks largely to its lower price compared with conventional LDPE and its better availability (both domestically and through imports). HDPE and conventional LDPE both accounted for around 22-23% of the market in 2004.
LDPE tends to be widely used throughout the PE film industry for a variety of applications because of its ease of processing and superior transparency. It is also the case that many of the relatively older lines used in China run more efficiently on conventional LDPE. HDPE use is driven mainly by the production of bags and sacks that accounted for 85% of its use in 2004.
PE film production is highly fragmented with more than 10,000 processors. The largest is Guangzhou Nanqiang Plastics Co. with an estimated production of 223,000 tons. However, this is still quite exceptional in China and the top 50 companies are estimated to account for only 18% of total PE film production.

The future outlook for the industry remains positive despite some slowing down in growth caused by a combination of rising raw material prices, the introduction of antidumping levies on Chinese bag producers in the USA, power shortages and government measures introduced to prevent the economy from overheating. These factors, however, are not expected to have any long-term implications for PE film production in China.
AMI a leading market research organization from UK has conducted this recent project. More details on this subject can be obtained from AMI