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CHANGING STRUCTURES IN THE NORTH
AMERICAN PLASTICS INDUSTRY
- FROM LOCAL TO GLOBAL INFLUENCES -
Applied Market Information Ltd.
6 Pritchard Street
Bristol, BS2 8RH, UK
Tel: +44 (0)117 31111511
Fax: +44 (0)117 3111534
Email: [email protected]
Applied Market Information LLC
1210 Broadcasting Road, Suite 103
Wyomissing, PA 19610, USA
Tel: +1 (610) 478 0800
Fax: +1 (610) 478 0900
Email: [email protected] www.amiplastics.com
Page 2
©Applied Market Information Ltd 2013
Western Plastics Association
The programme
About Applied Market Information
Where North America fits in the world
The position of North American demand
Downstream industries and changing structures
Global Flexible Packaging markets – the PE example
Consumer trends impacting plastics
Retailer trends impacting plastics
Conclusions
Slide 2 Slide 2
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©Applied Market Information Ltd 2013
About AMI Consulting
3 Western Plastics Association
Market Analysis
– In-depth multi-client reports
The NAFTA market for Thermoplastic
Concentrates (March, 2012)
The Global Market for BOPP films
The Global Market for Grass Yarns
Studies by application e.g. Pipes,
membranes, cables
Studies by polymer e.g. PP, PE
– Single client projects and reports
Market & Database products
– Plastics in India
– The Thermoplastic Compounding
Industry Report (NAFTA, Europe,
Asia, Latin America)
– Processor & compounder databases
Conferences
– Compounding World Forum
– AMI Plastics Industry Seminar
– Shrink and Stretch film
– Thermoplastic Concentrates
– Polyethylene Films
– Fire Retardants in Plastics
– Polymers in Cables
Other
Digital magazines
– Compounding World, Injection
World, Film & Sheet, Pipe & Profile
E-publishing contract services
Technical publications
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©Applied Market Information Ltd 2013
AMI has over 25 years experience in providing insight and information to the global plastics industry.
AMI has databases on over 30,000 plastic processors globally.
AMI has unrivalled knowledge on down stream plastics markets.
AMI Consulting
4 Western Plastics Association
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©Applied Market Information Ltd 2013
AMI Future Events
5 Western Plastics Association
The international marketing, business
and technical conference for the
polyethylene film industry
11-13 February 2014
The Shores Resort & Spa,
Daytona Beach, FL, USA
Organized by Applied Market Information
LLC
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©Applied Market Information Ltd 2013
AMI’s Digital magazines
www.filmandsheet.com www.pipeandprofile.com www.injectionworld.com
6 Western Plastics Association
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WHERE NORTH AMERICA FITS IN THE
WORLD
Evolving patterns of demand
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©Applied Market Information Ltd 2013
Western Plastics Association
The trends that shape the world
Global population growth to 9.2 billion by 2050
– With an increasing share living longer and requiring greater services
Urbanization as more of the population moves to cities
– By 2050 65% of the world population will be city dwellers
Transport needs will mean over 2.5 billion cars are needed by 2050
The fight to access resources:
– Raw materials to drive industrial development
– The basics of life water and food
– Energy and power needs will have grown by 50% from the levels of 2012
Energy efficiency and resource optimisation will be essential drivers in
the globally successful economies
Slide 8 Slide 8
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©Applied Market Information Ltd 2013
Western Plastics Association Slide 9
Total polymer demand by type 1983-2017
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
1983 1998 2012 2013 2017
mil
lio
n lb
sPolyethylene Polypropylene
PVC Polystyrene
Expanded Polystyrene ABS
PET Engineering polymer
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©Applied Market Information Ltd 2013
The World 1983 and 2012
98.8 million lbs 496.9 million lbs
Slide 10 Slide 10 Western Plastics Association
1983 2012
Europe20%
NAFTA17%
Latin America5%Greater China
29%
Asia15%
Indian Sub Continent
5%
Africa and the Middle East
9%
Europe38%
NAFTA30%
Latin America4%
Greater China6%
Asia17%
Indian Sub Continent
1%
Africa and the Middle East
4%
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©Applied Market Information Ltd 2013
Total world demand 1983-2017
Slide 11 Western Plastics Association
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
1983 1998 2012 2013 2017
mil
lio
n lb
s
Europe NAFTA
Latin America Greater China
Asia Indian Sub Continent
Africa and the Middle East
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©Applied Market Information Ltd 2013
Global polymer demand 2012
Slide 12 Western Plastics Association
Polyethylene34.6%
Polypropylene24.2%
PVC16.9%
Polystyrene6.1%
Expanded Polystyrene
2.2%
ABS3.5%
PET8.7%
Engineering polymer
3.8%
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©Applied Market Information Ltd 2013
Western Plastics Association
End use applications for all polymers 2012
Slide 13 Slide 13
Flexible
Packaging Industrial
7%
Flexible
Packaging Consumer
17%
Rigid Packaging
Industrial6%
Rigid Packaging
Consumer22%
Building
20%
Agriculture
2%
Automotive
3%
Electrical
Appliances5%
Medical
1%
Housewares
3%
Toys
1%
Sport and Leisure
1% Furniture
1%Others
11%
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©Applied Market Information Ltd 2013
Total NAFTA demand 1983-2017
Slide 14 Western Plastics Association
0
20,000
40,000
60,000
80,000
100,000
120,000
1983 1998 2012 2013 2017
Mil
lio
n lb
s
PolyethylenePolypropylenePVCPolystyreneExpanded PolystyreneABSPETEngineering Polymer
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©Applied Market Information Ltd 2013
Total NAFTA demand 1983-2017
Slide 15 Western Plastics Association Slide 15
Units: million lbs 1983 1998 2012 2013 2017
Polyethylene 13,272 30,640 34,673 35,467 40,075
Polypropylene 3,526 13,444 15,626 16,067 18,232
PVC 6,094 13,962 13,427 13,619 14,399
Polystyrene 3,758 6,083 4,728 4,761 4,904
Expanded Polystyrene 496 937 1,358 1,395 1,492
ABS 904 1,631 1,713 1,770 1,940
PET 551 4,188 10,238 10,612 12,100
Engineering Polymer 886 2,513 4,033 4,232 4,963
Total 29,487 73,398 85,795 87,922 98,105
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©Applied Market Information Ltd 2013
Western Plastics Association
Dynamics of the NAFTA market
Highly evolved market dominated by USA economy
– Mexico the faster growing area
2012 characterised by:
– Acceleration of domestic demand
– Profitability maintained
Evidence of renewed acquisition activity in processing industry
Renewed confidence in domestic manufacturing of both resin and
plastics processing; shale gas driven
Global investments continuing, driven by the desire to serve brands on a
global basis
– Importance of retailers in encouraging low cost goods from around the world
– Continued global investments by US companies
North American resin and additive companies continue to be at the
forefront of global development
Slide 16 Slide 16
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Downstream industries and their changing
structures
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©Applied Market Information Ltd 2013
Western Plastics Association Slide 18
The plastics industry in 2013
Plastics processing is successfully established in every region and
country of the world
The impact of plastics products and goods is felt in every economy
and society on the planet
The average consumer relies on and uses numerous distinct plastics
products every day
Plastics drive the global economy
– Building and infrastructure
– Communications
– Transport
– Packaging of all consumer goods (rigid and flexible)
– Leisure and social activities
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©Applied Market Information Ltd 2013
Western Plastics Association Slide 19
Development of the processing industry
Local production
National and regional processors
Interregional processors
Global dimension
Pre 1970’s
1970’s-1980’s
1980’s- 1990’s
2000’s-2010
In same
time resin
producers exit
processing and
financial
groups
take larger
holdings
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©Applied Market Information Ltd 2013
Western Plastics Association Slide 20
Global distribution of processors 2013
Total number 196,255
Europe13.2%
NAFTA7.1%
Latin America5.9%
Greater China34.2%
Asia18.6%
Indian Sub Continent
15.4%
Africa and Middle East
5.6%
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©Applied Market Information Ltd 2013
Western Plastics Association Slide 21
Global processors by activity 2013
Total Number 196,255
Injection Moulding
61.5%Blow Moulding7.9%
Rotational Moulding
0.9%
Film14.6%
Pipe 2.6%
Profile4.7%
Cable0.9%
Sheet2.3%
Compounders2.5%
Other2.1%
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©Applied Market Information Ltd 2013
Western Plastics Association Slide 22
Processor industry structure 2013
% of polymer demand % of processor numbers
Europe13.2%
NAFTA7.1%
Latin America5.9%
Greater China34.2%
Asia18.6%
Indian Sub Continent
15.4%
Africa and Middle East
5.6%Europe20.5%
NAFTA17.3%
Latin America5.0%
Greater China28.8%
Asia14.8%
Indian Sub Continent
5.2%
Africa and the Middle
East8.5%
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©Applied Market Information Ltd 2013
Industry dispersed in all countries
– Strong structure in United States
– Developed industry in Canada
– Rapidly evolving industry in Mexico
Many companies but limited resources
– The average company have limited management skills and resources
Consolidation in the last ten years
– Takeovers and mergers driven by specialisation
– Consolidation of the customer base
– Movement of business to Asia and developing world
– Future of equity owned assets uncertain
Specialization increasing
Number of truly National players
– Few with truly global ties
Western Plastics Association Slide 23
The plastics industry in NAFTA
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©Applied Market Information Ltd 2013
The structure of the North American industry
Slide 24 Western Plastics Association
Injection Molding
66%Blow Molding
6%
Polyolefin Film
6%
Rotational
Moulding2%
Pipe and Profile
8%
Cable
1%
Sheet
4%Compounders
5%
Others
2%
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Global flexible packaging markets
-the Polyethylene example-
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©Applied Market Information Ltd 2013
Western Plastics Association Slide 26
Preservation
and
protection
Product
Information
Consumer
appeal Supply chain
efficiency
Sustainability
• Freshness and food value
maintained
• Pack integrity in supply
chain
• Clear brand identity
• Range of colors & effects
• Stored safely with minimal
space
• Identity and impact on the shelf
• Differentiation on the shelf
• Easy to carry and transport
• Strong and Robust
• Light weight
• Easy to open & reclose/seal
• Easy to carry
• Easy to identify for recycling
• Meets packaging waste
requirements
Range of
retailer
formats
Packer, Retailer, Consumer – meeting many needs
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©Applied Market Information Ltd 2013
Global size of market
Europe23%
NAFTA19%
Latin America7%
Greater China23%
Asia15%
Indian Sub Continent
5%
Africa & Middle East
8%
Western Plastics Association Slide 27
Total market 115 billion lbs
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©Applied Market Information Ltd 2013
Western Plastics Association Slide 28
Global distribution of PE extruders 2013
Total number of
companies 28,620
Europe7% NAFTA
4%Latin America
9%
Greater China38%
Asia23%
Indian Sub Continent
14%
Africa and Middle East
5%
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©Applied Market Information Ltd 2013
Average film producer throughput 2012
Slide 29 Western Plastics Association
0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00
Indian Sub Continent
Asia
Greater China
Latin America
Africa & The Middle
East
Europe
NAFTA
Million lbs
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©Applied Market Information Ltd 2013
Base substrate demand – trends and comments
Western Plastics Association
PE Film market is a 84 billion lbs.
market globally accounting for over
half of world PE demand, future
growth globally 4.5% per annum
PP Film market is a 19 billion lbs.
market global market growing at
over 6% per annum
Other films and plastic substrates
account for over 11 billion lbs. and
are growing at over 7% per annum
Strong regional focus to most
markets, but with trade increasingly
influencing markets
Polyethylene73%
BOPP14%
PP film3%
PET6%
Others4%
Slide 30
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©Applied Market Information Ltd 2013
Increased specialisation and focus
Materials - wide range of polymers and copolymers
Innovation in additives and modification
Extrusion - more sophisticated processing (co-extrusion)
Conversion
– Improved printing (more colors greater print definition)
– Pack making (specialized shapes and structures)
– Lamination
Need to understand new materials
- training and investment
Investments in co-extrusion often
necessary to fully exploit palette of
materials
Co-extrusion often the route to
achieve downgauging and superior
performance
Development of new products
essential to justify investment
Western Plastics Association Slide 31
Technology Advances Impact on Extruders
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©Applied Market Information Ltd 2013
Western Plastics Association Slide 32
Key drivers of packaging growth
Environmental
– Recycling
– Minimisation
Cost savings
– line speed/filling speed improvement often related to sealing time
– Greater pack integrity
– Down gauging
Others
– Reclosability
– Tamper evidence
– Excitement!
– Barrier properties
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©Applied Market Information Ltd 2013
Case study of the opportunity: Labels
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Pressure Sensative Glue Applied IML Sleeves and Others
Plastic Paper
Western Plastics Association Slide 33
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©Applied Market Information Ltd 2013
Case study of the opportunity: Sacks
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Europe NAFTA Asia Latin America Japan Rest of the
World
Polyethylene Polypropylene Paper
Western Plastics Association Slide 34
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Consumer trends impacting
the plastics industry
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©Applied Market Information Ltd 2013
Western Plastics Association Slide 36
Profits from forecasting and understanding
Future behaviour and attitudes
Future needs
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©Applied Market Information Ltd 2013
Western Plastics Association Slide 37
How are our lives changing?
Time is money
“instant
convenience”
Individual as a
market
Communications
age
Appealing to
the young at
heart
The natural
world
Healthy lifestyle
choices
How are our lives
changing?
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©Applied Market Information Ltd 2013
Western Plastics Association Slide 38
True value propositions
Can I offer elements of uniqueness?
Do my products contribute to the
uniqueness of the brand?
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Retailers and brands and their
influence on market development
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©Applied Market Information Ltd 2013
Retailer brand issues/challenges
Slide 40 Western Plastics Association
Shorter product life cycles
– More product variants
Environmental challenge
Rise of private label
– Walmart private label $135 billion
– Nestle is a $98 billion company
Need for brand protection
How to sell in an interactive world
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©Applied Market Information Ltd 2013
Retailers & Consumers
Slide 41 Western Plastics Association
What is a brand?
Promise How does it look
Aesthetic appeal
Environmental impact
Experience How does it work
Functionality
Memory What brings you back
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©Applied Market Information Ltd 2013
Western Plastics Association Slide 42
What drives innovation
Innovation
What’s
Needed?
Consumer
Competition
Stakeholders
What’s
Possible?
Technology
Chemistry
Materials
Processes
Business Model
Supply Chain
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Summary and
conclusions
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©Applied Market Information Ltd 2013
Western Plastics Association Slide 44
Observations – Market overview
The footprint and influence of plastics products are now global in scope and contribute to all areas of industry and the economy
Although we are slowly seeing a global industry emerge in many markets the extent of globalisation is limited:
– Few global standards exist
– Resin availability and its pricing remains regional
The activities of global brands, combined with modern technology, are the major factors reshaping the structure of the upper levels of the processing industry. A limited number of players are adapting to this circumstance
The demand for plastics are also developing under the influence of economic, environmental and an increasingly political/legal frameworks.
Stronger growth is occurring in the more populous developing economies of India and China. Other countries joining this group are Russia, Brazil and Indonesia.
All around the world the opportunity to replace traditional material is strong
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©Applied Market Information Ltd 2013
Western Plastics Association Slide 45
Observations – industry structure
The processing industry continues to be extremely fragmented with the faster growing regions of the world seeing the number of processors advance while the more developed world is seeing a decrease in processor numbers.
Within each major region and also on a global scale the larger processors are gaining an increasing share of the overall market. This process is most advanced in the NAFTA region where a single market has existed for many years, but similar trends are observable in the other regions.
Thus in the future the industry shape will be characterised by:
– The big will get bigger, the small entrepreneurial and focused supplier will remain
– The medium size processor will be challenged
“Disruption” will be the characteristic of markets to an increasing extent
As larger groups improve their profitability, access to capital and strong balance sheets, this will drive a further process of company acquisition and restructuring
Energy costs are emerging as a longer term driver of processing location
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THANK YOU
www.amiplastics.com
Applied Market Information Ltd.
6 Pritchard Street
Bristol, BS2 8RH, UK
Tel: +44 (0)117 3111511
Fax: +44 (0)117 3111534
Email: [email protected]
Applied Market Information LLC
1210 Broadcasting Road, Suite 103
Wyomissing, PA 19610, USA
Tel: +1 (610) 478 0800
Fax: +1 (610) 478 0900
Email: [email protected]
Page 47
Attendees to this seminar are reminded that the contents are copyrighted and that the
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otherwise agreed and confirmed by Applied Market Information Ltd. in writing, it is
forbidden to distribute the contents to any third parties or transmit it via any electronic
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Andrew Reynolds: [email protected]
Applied Market Information Ltd. 6 Pritchard Street
Bristol BS2 8RH, UK Tel: +44(117) 3111511 Fax: +44(117) 3111534
E: [email protected] www.amiplastics.com
Applied Market Information LLC 1210 Broadcasting Road, Suite 103
Wyomissing, PA 19610 USA Tel: +1(610) 478 0800 Fax: +1(610) 478 0900
E: [email protected] www.amiplastics.com