Reduced growth prospects and increasing imports, particularly from South East Asia, are what await the polyethylene film industry for the rest of this decade, according to a new survey recently completed by Applied Market Information Ltd (AMI, Bristol, GB). The AMI specialists report that demand for film products (in volume terms) is expected to grow at just 1.3% a year for the next seven years, well down on historical growth trends, whilst at the same time net volumes of imports will rise by over 13% a year from the current level of 58,000 t to over 120,000 t by the year 2000.

The raw materials being used by film extruders are also expected to change over this period as increasing volumes of recycled resins are processed. Demand for this feedstock is expected to grow by 4.3% per annum. This is well above that expected for prime resins, and in the case of conventional LDPE the market is expected to decline over the remaining years of this decade.

AMI' s research has revealed that a total of 5,256,500 t of film products were made in Western Europe last year, whilst the market consumed 5,314,550 t. AMI point out that whilst this gives a current net import level of just over 58,000 t, this is still relatively small representing 1.1% of European demand. Also whilst this net import level is expected to increase substantially over the remaining years of this decade the anticipated volumes of 122,000 t will still represent just 2% of the European market. The main source of these imports will be China and the countries of South East Asia where lower overheads and cheaper labour costs will allow them to competitively produce commodity products such as carrier and produce bags.

This analysis is borne out by the statistics given by AMI in their study. Thus in 1993 the net import level for carrier and other small bags was nearly 165,000 t and is clearly the market where there has been the highest level of import penetration, a scenario which AMI forecasts will continue.

There are of course sectors in which Europe has a net export of film product. Thus for example the stretch film market had a net trade of nearly 60,000 t in 1993, and over 38,000 t of heavy duty sacks were produced in excess of European demand. However, whilst the trade balance for heavy duty sacks is expected to remain at around 30,000 t for the next few years, demand for stretch film will grow faster than production so that the net export level will have almost halved by the year 2000.

Stretch film though does represent the strongest market for film products over the coming years. Demand is expected to increase on average by nearly 6% a year up to the end of the decade. Other markets which should grow above average include laminating film and technical coextrusions where growth of between 3.5 to 4% a year are forecast by AMI.

On the downside, AMI point to declining fortunes for agricultural silage film and heavy duty sacks. In the case of agricultural silage, reductions in agricultural subsidies from the EC are resulting in decreasing livestock levels with a consequent knock-on effect for the needs for silage film. Furthermore this application is increasingly moving over to stretch wrapping of bales which significantly reduces the volumes of film used. The heavy duty sack market is declining because of the move towards bulk delivery systems such as IBCs.

In addition to analysing the market by end use product, AMI also sub-divide it by country. As would be expected Germany has the largest market both in terms of production and consumption. Italy is the other major centre for film production and has a net export surplus of over 70,000 t. In contrast France has the most significant deficit with net import needs of nearly 150,000 t to meet local demand. Within Europe there is in fact quite a high level of trade between the various countries with an average of 20% of any one country's domestic demand being met by imports.

READER SERVICE: Further details on the AMI multiclient study "The European Market for Polyethylene Film Products": PIE-No. 36826.