Spunmelt Polypropylene – A View of Supply and Demand in North America David Allan, Editor, Nonwovens, RISI January 28, 2014 INDA Vision Consumer Products Conference, Dallas, Texas, USA 1
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Spunmelt Polypropylene – A View of Supply and Demand in North America
David Allan, Editor, Nonwovens, RISIJanuary 28, 2014
INDA Vision Consumer Products Conference, Dallas, Texas, USA
1
2
Agenda
1. Demand history, forecast and drivers.
2. Evolving issues and forces behind
supply growth.
3. Issues with supply and demand.
4. Conclusions.
3
Our View• North American SM PP demand in 2010-15
growing modestly (CAGR of 2-4%/year in tonnes).– Roughly flat demand in baby diapers in tonnes; area
usage up slightly.– Mid-single digit growth in inco, medical, some smaller
uses, in tonnage terms• Current modest supply excess will be tamed.
– Addition of new capacity likely to slow down.– As newer lines are depreciated, older equipment will
begin to lose competitiveness.– Market should be in rough balance by 2016.
4
Global NW Demand Forecast
01,0002,0003,0004,0005,0006,0007,0008,0009,000
10,000
2000 2005 2010 2015
Source: INDA, EDANA, RISI
000 tonnes
Other NWOther SpunlaidSM PP
5
North American NW Demand Forecast
0
600
1,200
1,800
2000 2005 2010 2015
Source: INDA, RISI
000 tonnes
Other NWOther SpunlaidSM PP
6
US/Canada Demand by End-Use (INDA; 2010)
356
92
N.A. SM PP End-Uses by Sector(000 tonnes)
Disposable Durable
168.5
26
40.5
56
23
Hygiene Coverstock (All NW fabrics)
(000 tonnes)
Baby Diaper Train. PantsFem. Hy. Adult Inc.Underpads
7
What Has Been Growing Recently?
• Adult incontinence is only major sector showing big unit sales growth.– Inco growth is under-
stated: excludes online, institutional.
• Even 52-wk numbers can be skewed by timing of product intros, pricing and inventory movements.
• IRI includes Walmart, Sam’s Club.
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
Dia
pers
Trai
n. P
ants
San
. Nap
kins
Adu
lt In
c.
US Retail Unit Sales (IRI; 52 weeks ending
12/1/13)
YOY % Change
8
$ growth: +5.6%
Where Nonwovens are Used in the Diaper (INDA; 2010)
Top sheet, 26%
Barrier leg cuff, 21%
Back sheet, 31%
Other, 23%
% of Total Baby Cover Stock
• Average NW weights declining e.g. in top sheet, barrier leg cuff and core wrap.– Core wraps below 10
gsm have been made.– Other components could
get to 10-12 gsm. – Some NW
producers say they are already making them for a few customers.
9
US births: return toward trendline, then slow growth
• US ‘crude birth rate’ was at 14.0/1000 in 2008.– Projected 2013: 13.66– Projected 2015: 13.4– Projected 2020: 13.2
• Fewer births happen in recessions; births now returning to more stable level.
• Birth rate will not return to levels of previous decades.
3,7003,8003,9004,0004,1004,2004,3004,4004,500
2007
2008
2009
2010
2011
2012
2015
2016
2017
2018
2019
2020
Source: National Center for Health Statistics; US Census Bureau
US Births (000)
10
US Population by Age (from CIA World Factbook)
11
Meltspun Development for Hygiene Products
ProductBenefitsContainment
Skin wellness
Sustainable
Sensory
Fit and Closures
Value
Benefit Perception
MeltspunFocus
Web uniformity
Lighter weight
Green polymers
Reduced equip. cost
Cloth-like aesthetics
Higher through-put
Laminate processing
New benefit additives
Recent Developments
Benefit agent deliveryLow cost/energy, more uniform melt process.Natural, renewable and biodegradable fibersSoftness; tactile and
visual properties Better barrier, thru put micro and nanofibersPolymers and blendsLower cost, enhanced
stretch laminates
12
12
Nonwovens Market R&D Investment*
ContinuousImprovement
(41.8%)
Other(3.4%)
ProductDifferentiation
**(10.3%)
New Benefits and Uses(28.5 %)
Cost Reduction
(8%)
New Technology
Push(8 %)
• Largest R&D effort targeted at improving existing technology
• New benefits and product uses also a key focus for investment
*Based on issued patents and applications during 2012
** Differentiation = product made distinctive with consumers (printing etc.)
13
New Technology and BenefitsNote: drawn from 2012 and 2013 patents and applications
Technology CompanyFreshness sensation active for hygiene products Procter & GambleHigh active loading (80%) functionalized particle attachment, functionalized coatings; superhydrophobic
P&G, Cellresin Tech., various institutes, etc.
Modeling and simulation (3D product softness, graphics, topsheet aesthetics, absorbent system, SAP addition process)
P&G, First Quality
Smart, responsive nonwovens – BM responsive diaper, tampon capacity indicator, triggered agent delivery, dehydration indicator, liquid crystals, color change etc.
Unicharm, P&G, Kent State University, SCA, Dow
Higher yield nanofiber production, functionalized fibers
Nissan, UC, 3M,PGI , Toray
Micro and macro-texturing of nonwovens and films –puckering, zones, protrusions, ridges and troughs, shape memory polymers
P&G, K-C, Unicharm, Tredegar, 3M
14
Getting lighter; more ahead?• Most coverstock basis weights are in 12-17 gsm range,
depending on element of the diaper – often 14.5-14.8 gsm.– Move to 10-12 gsm: in the cards or a ‘sea change’?– Trade-offs: quality; throughput on some lines; price.
• Would take several years to get to 10-12 gsm; how much lower can it go? (Some lines have already made 10 gsm.)– Converting issues.
• One view: bsw will continue to drop at 1-2%/year for next five years.
• Some diaper makers could chose heavier weights to differentiate themselves.
15
Sustainability issues
• It is unlikely sustainability will hurt underlying demand trend in near term.
• Pressure from retailers will continue.• What is the answer?
– Bio-based polymers?– Using less material per disposable product.– Will a recycling approach ever take off?
• K-C diapers-to-compost deal with OCS.
16
Evolution of NA inco market• Quality evolution:
– Discretion (underwear-like fit and appearance due to esthetics and stretchable/elastic materials; odor control).
– Health (breathable film/NW laminates; ADL materials selected to promote skin dryness).
• Segmentation by degree of incontinence; ambulatory/non-ambulatory; institutional vsindividual purchase.– Retail sector: Will continue moving into mainstream
distribution channels; losing ‘ick’ factor.• Average material per unit fairly stable because much
of market’s growth is in light incontinence sector.
17
Diapers and Inco – Growth Implications
• Baby diaper unit sales likely to remain flat for many years.
• Inco unit sales probably growing 4-6% a year now and for foreseeable future.– US population 65 and over in 2009 = 40 million, or 13% of
total.– Forecast for 2030 is 72 million or 19%.– Inco penetration in US is probably not at 50% of potential.
• Diapers and training pants are a $4.8 billion business in USA today; inco is $1.4 billion at retail.– Inco expected to pass diapers in Japan by 2020 – when
will that happen in USA?18
Two Perspectives On North American Capacity
24 SB; 33 SM
05
101520253035
Before2001
2001-5 2006-10 2011-
When Installed
11 of 3.5 M; 8 of 4.2 M; 7 other
0123456
0
5,000
10,000
15,000
20,000
25,000
Wider Sometimes = Higher Capacity
Capacity (Tonnes; Left Axis)Width (Meters; Right Axis)
19
Capacity issues• Overcapacity is often a temporary issue.
– Pig-in-the-python.– Also, capacity numbers tend to be nameplate.
• Looming obsolescence of some lines.– Older lines may offer lower throughput, less light-
weighting capability.– As new lines are depreciated, some older lines look
less advantaged.– It is easier for big multi-line companies to rationalize
capacity.• Smaller companies more likely to specialize where
possible, hold on to existing business where necessary.
20
Projected Demand Increase vsCapacity Added or Planned in 2010-15
40,000
20,000
37,000
16,000
100,000
0
20,000
40,000
60,000
80,000
100,000
120,000
Capacity Increase (000 tonnes) Projected Demand Increase
21
New Capacity vs ExistingNew Lines
• Flexibility.– BSW range.
• Throughput; lower cash cost/unit.
• Better able to adapt to customers’ evolving new technology needs?
Existing Lines
• Known quantity.– ‘Well-run R3s quite
competitive with R4s.’
• May be fully depreciated.– Can be operated
economically at lower operating rates.
• If already upgraded to make specialty products, don’t require additional capital.
22
Consolidation or new suppliers?• ‘The trend of tomorrow – and always will be’ –
view of one participant.– In a technology-intensive market, is it better to buy an
older line that isn’t ideal for your needs or build a new one that is?
– Big customers like competition.– On the other hand – PGI/Fiberweb/Providencia.
• Impact of globalization.– Invest capital following your customer to China or
upgrade technology in mature market with minimal growth potential?
• Risk of getting over-extended.
23
PP resin costs – stable since economic recovery ($/lb)
0.0000.2000.4000.6000.8001.0001.2001.4001.600
Jan
2006
May
200
6S
ep 2
006
Jan
2007
May
200
7S
ep 2
007
Jan
2008
May
200
8S
ep 2
008
Jan
2009
May
200
9S
ep 2
009
Jan
2010
May
201
0S
ep 2
010
Jan
2011
May
201
1S
ep 2
011
Jan
2012
May
201
2S
ep 2
012
Jan
2013
May
201
3S
ep 2
013
$/lb
Source: Nonwovens Markets
PP Resin 14 gsm SB Gap Linear (Gap)
24
Future issues• Margin squeeze.
– Diminishing returns on new capacity?• Sustainability.• Ability to deliver enhanced attributes and
economic value.– With margin pressures; need to invest to
follow customers overseas.• What happens when adult incontinence
achieves full penetration?
25
Conclusions• Demand growth will be driven largely by
adult incontinence penetration rate increases.
• Innovation will continue to focus on features, economics, sustainability.– Present research effort appears focused on
improving existing technology – fundamental innovation is still possible.
• Capex likely to slow down; increasing focus on improving existing assets?
26
My heartfelt thanks to:• The staff at INDA.• Keith Osteen and Rob Johnson of Smith,
Johnson & Associates.– Supplied slides 12-14 based on their definitive work
on Nonwovens Innovation and Technology Review 2013.
• The people who agreed to be interviewed in the research phase of this presentation.
27
Nonwovens Markets
Nonwovens Company Profiles
Nonwovens Markets Price Watch
Nonwovens Innovation and Technology Review 2013
Thank you for your attention!For more information:
www.nonwovens.com
28
Related Documents
