The market for plastic blow molded drums, intermediate bulk containers (IBCs), and tight-head pails (THPs) is sluggish right now, with growth of only 1% to 2% in 2002. Some manufacturers believe 2003 will be flat. The result is a lot of cutthroat competition and low profitability as producers struggle to buy or steal market share from each other.
Blow molded drums, IBCs, and THPs currently consume about 450 million lb of resin. That amount is projected to grow around 3%/yr for the next five years, reaching just over 500 million lb by 2006. Some blow molders claim the IBC segment is responsible for most of this growth.
IBCs take market share
Plastic drums typically range from 15 to 65 gal, 55 gal being the most common size. IBCs range in size from 220 to 550 gal. THPs typically range in size from 3 to 15 gal. Slow growth of these containers is a reflection of the general state of the economy. Nonetheless, blow molded drums continue to experience a stronger growth rate than steel or fiber drums. Two areas where steel drums will retain an advantage over plastic is in storage and transportation of flammable petroleum products and where greater stacking strength is required.
Demand for IBCs is reported to be increasing at a faster rate than for blow molded drums. The 275- and 330-gal IBC can take the place of five or six 55-gal drums, providing reduced storage space, lower overall shipping costs, and greater ease of container reuse or recycling. An additional benefit for IBC users is economies obtained by purchasing packaged products in larger unit volumes. Also, the price of IBCs has dropped by nearly 50% in the past six years.
Consequently, conversion from drums to IBCs is becoming common, which is resulting in overcapacity for production of 55-gal drums. Many smaller blow molders of drums and pails can’t afford new equipment to produce IBC products.
Who’s who of the top five
During 2002, Russell Stanley Holdings, Inc. and its Hunter Drum Ltd. Div. was the largest producer in the market, representing a market share of around 40%. Greif Brothers Corp. was the second largest processor in this market, with a market share ap proaching 20%. The third largest factor was Hoover Material Handling Group, Inc. Other companies in the top five producers are North American Packaging Corp. and Schutz Container Systems. Collectively, these five companies account for about 80% of the market.
Mastio & Company, based in St. Joseph, Mo., is a well-known consulting firm specializing in industrial-consumer opinion research and market trends in the plastics industry. For more information, call (816) 364-6200 or visit www.mastio.com/pt/outlook.html.