Contacts within the Chinese BOPP film industry suggest that a further 2 million tonnes of new BOPP film capacity is to be installed in China over the next three years. This new investment will expand the domestic film industry from 4.5 million tonnes in 2014 to 6.9 million by 2018, and then it will account for over half of the world’s production capacity for BOPP films.
In 2014, we estimate the Chinese market consumed around 3.4 million tonnes of film. It produced around 3.5 million tonnes (75% utilisation), exported a couple of hundred thousand tonnes and imported around 100,000 tonnes of mainly low priced grade 2 films and specialist grades. A hefty chunk of the 7.4 million tonnes of BOPP film used worldwide was used in China and despite the slowdown in Chinese GDP growth, the Chinese BOPP film market still expanded by around 6% last year.
But with already underutilised capacity in the Chinese market, one might ask, why do they need all of these new machines, some 10 metres wide and some able to produce an astonishing 70,000 tonnes of film per annum?
Perhaps this is the last big investment phase in the Chinese BOPP film industry that is designed to set it up for the long term? We understand that the new political leadership in China is planning to rebalance the economy by squeezing credit and reducing the level of government investment stimuli. So capital may not be as readily available in the next few years and investors are getting in now while they can?
With film extrusion capacity at a level that already exceeds demand and due to get worse and with little apparent desire to export to fill the excess, some Chinese production lines will have to remain idle. New ones will undoubtedly be delayed and others will run slowly until BOPP film demand in China picks up. However, at 6% p.a. growth, which is equivalent to 200,000 tonnes a year, it won’t take long!
Image may be NSFW.
Clik here to view.
So, perhaps all of this new investment is not excessive but simply as the Chinese proverb says, ” 种好一棵树的最好时间只有两个，一个是二十年前，另一个就是现在”.
“The best time to plant a tree was 20 years ago. The second best time is now.” – Chinese proverb
