BOPP Film: How Real Is the China Threat?

Plans to increase BOPP capacity in China have industry players worried.

The (US) $6 billion world BOPP film industry has experienced turbulent times in the past ten years as supply and demand balances have created a cycle of almost “boom and bust.” Right now, just as world markets were improving, industry players have become fearful of the effect of the latest announcements of increases in capacity over the next two years in China.

Over the past five years, an additional 1.2 million tonnes of BOPP film production capacity has been installed worldwide, with a corresponding increase in demand of 1.4 million tonnes. During this period, increases in demand have been outstripping increases in supply, and regional markets have been tightening. In North America, capacity closures and little additional investment, alongside an improving demand situation, have been welcomed as a positive trend for those wishing to improve returns and set aside profits for new investment. This has been true of embattled suppliers in South East Asia also.

The “tightening” effect is best illustrated in Table I. It shows that in most BOPP film markets, the percentage increase in demand from 1997 to 2002 has been greater than the percentage increase in capacity. As a result of this imbalance, demand has been catching up with supply, enabling producers to better utilize their capacity and improve profitability.

In stark contrast to the tightening supply/demand situation in other regional markets, Chinese film suppliers have been investing heavily, well ahead of domestic market demand and often it appears, without an awareness of the competitive environment. Fortunately for world producers, the investment program, which has increased Chinese production capacity by 157% since 1997, has not resulted in much exporting activity and therefore has had little impact on regional markets.

Film producers in China appear to have managed their internal market by running plants below nominal capacity and often have stopped them completely, rather than turning toward exporting. The Chinese domestic market also has seen demand increase by 100% in the past five years, helping to absorb some of the excess capacity and to mold a more balanced market.

So to date, the massive investment (45% of all capacity installed since 1997) in the Chinese BOPP film industry largely has been restricted to affecting internal market dynamics and has not caused any real difficulties in other markets.

When looking at the figures in Table I, the percentage growth in historic capacity in China looks ominous, but our research has established it has had little historic impact on other world markets.

The market is not so sure this will continue to be the case over the next five years, when the Chinese BOPP film industry is set to almost double again in size, and there are fears Chinese producers will need to become more active on the international stage to remain viable.

Are the Fears Well-Founded?
This is a difficult question to answer, but let's weigh the evidence to gauge whether the Chinese BOPP film industry has the capability or the need to become a force in world export markets (see Table II.)

In our view, the evidence suggests that in the next two years China will have the production capability to compete in world markets but currently lacks the skills and market knowledge to develop medium-term export markets. In addition, the industry does not really need to seek volume from other markets — a burgeoning domestic market (the fastest growing in the world), an acceptance that lower utilization levels are viable, and import volume to substitute, all mean that Chinese producers, as in past years, are unlikely to make any significant impact on the international market, i.e., no sudden “flood” of film and collapse in BOPP film prices.

While this generally will be the case, markets and producers cannot expect to remain totally unaffected

Where Are the Export Targets?
Given the strong trade links between the US and China and comparable BOPP products, it is likely the North American market will be targeted by the more adventurous producers in China. So if anyone feels the effect, it will be producers with operations in NAFTA countries such as ExxonMobil, Treofan, Vifan, Inteplast and AET, and they will need to be wary.

Future Prospects
Looking forward, our world analysis highlights two certainties:

  • Additional BOPP film capacity will be installed in China, in excess of market demands.

  • Chinese BOPP film demand growth will remain the fastest in the world.

We cannot question the judgement of Chinese companies that have invested in new capacity, but there is a question mark on how this capacity will be utilized in the short term. Our assessment is that the Chinese industry has the potential to pose a threat to world market stability, but many factors will combine to limit it and, in time, negate the threat.

The world's leading BOPP film producers should however, remain vigilant, and perhaps consider their own investments in or “links” to the fastest growing BOPP film market in the world.


The Major BOPP Film Producers at the End of 2002
ExxonMobil (USA)
has plants in USA, Canada, Belgium, Italy, and the Netherlands with total production capacity around 250,000 tpa. It also has sales and marketing and contract production agreements with producers in Canada, Brazil, and the Philippines. ExxonMobil supplies plain, coextruded, and coated films. The company is the world market leader in all aspects.

Treofan (Netherlands) recently has been established through a takeover and a joint venture that brought together Trespaphan, Moplefan, and Shorko Australia. The company has production capacity totalling some 250,000 tpa with sites in Germany, France, Italy, Belgium, Mexico, Australia, and South Africa. While not legally part of the group, the Dor Film plant in Israel also is administered by the group. Treofan supplies plain, coextruded, and coated films as well as CPP film.

Vifan (Italy) has capacity around 170,000 tpa at plants in Italy, Canada, and the US. Additional capacity plans for North America have been shelved until the market improves. Vifan produces plain and coextruded films.

NanYa/Inteplast (Taiwan) supplies a range of plastic films including BOPP, PVC, PE, CPP, and PET. It has around 145,000 tpa of capacity at plants in Taiwan, China, and the US, with an additional plant being established in Vietnam. The company produces plain and coextruded films and a range of synthetic paper.

AET (USA) has been active in rationalizing capacity in the US with two companies bought and capacity closed. Currently it has 115,000 tpa of capacity in the US and Canada. Plans to grow the business through mergers/acquisitions have been unsuccessful in recent years. The company supplies plain and coextruded films.


The World BOPP Film Market 2002 is a bound, hard-copy publication providing volume statistics on BOPP film capacity and consumption for the period 1997 to 2002 and forecasts to 2007. It also provides profiles of the world's leading BOPP film producers accounting for more than 50% of the world's installed capacity.

The European Flexible Packaging Market 2003 includes a review of regional plastic film, aluminum foil, and paper supplies; statistics on the size of production, trade, and demand by European market by value and by major country; a detailed review of flexible packaging by 16 major end uses; and forecasts of substrate volume and end-use values to 2007.


Simon King is managing director of PCI Films Consulting Ltd. based in Banbury, U.K. He has more than 20 years of senior level experience in flexible packaging markets and is co-author of two new studies: “The World BOPP Film Market 2002” and “The European Flexible Packaging Market 2003.” PCI also produces dedicated Quarterly Business Reports and Regional Supply/Demand Reports for the polyester and polypropylene film and flexible packaging markets. For more information contact info@pcifilms.com; pcifilms.com



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