After some consolidation in the first half of 2008, North American production of plastic films will resume its long-term uptrend during the second half of the year. Overall, film output will expand by 4% in 2008. This follows a gain of 3% in 2007. The current bout of sluggish growth in the U.S. economy, particularly in retail sales, has restrained film markets. But consumer spending will start to gain momentum in the third and fourth quarters. Film producers will also likely benefit from a gradual downtrend in resin prices this year.
Oriented polypropylene film has been one of the fastest growing segments, and this will hold true this year. Output of OPP film jumped 12% in 2006 and another 7% in 2007. Our forecast calls for at least 5% growth in 2008. Demand for non-oriented PP film is also strong. Last year’s gain of 12% will be followed by an expansion of 5% to 7% this year.
Expectations for growth in polyethylene film in 2008 are not quite as high as for PP. Output of PE packaging films registered modest growth in 2007, and we forecast more of the same in 2008. These market segments are mature, and the volume of film production tends to grow by about the same rate as U.S. retail sales.
Growth in non-packaging PE films (bags, can liners, diapers, etc) was stronger than for packaging films last year, but this growth rate will decelerate in 2008. The non-packaging PE film data exhibits a strong cyclical pattern, and after hitting a cyclical peak in 2007, little or no growth is predicted for 2008. However, agricultural films will enjoy another year of strong market demand while films used in residential construction will have to endure another slow year.
The plastics sheet sector is still much smaller in volume than film, but ever since 2004 the growth rate for sheet has been much more robust. After a gain of 5% in 2007, total production of plastic sheet products will expand by 6% to 7% in 2008. Packaging is responsible for most of this growth, but most other sheet products are also expanding. Demand for plastic sheet is currently constrained by the high cost of resins, but that drag is being offset by demand created from new applications.
One of the fastest growing sheet segments is calendered PVC. Some segments of this market were up 25% in 2007, and double-digit growth is expected again this year. A lot of calendered PVC is used for packaging, but there has also been a surge in recent years in demand for credit cards, ID cards, gift cards, coupons, etc.
Production of PE sheet grew 6% last year, and another 5% growth is forecasted for 2008. Output of PP sheet increased by 4% in 2007. PP sheet for packaging expanded 2% last year while output of non-packaging PP sheet grew 6%. Similar growth rates are predicted for 2008.
Bill Wood, an independent economist specializing in the plastics industry, heads up Mountaintop Economics & Research, Inc. in Greenfield, Mass. He can be contacted by e-mail at BillWood@PlasticsEconomics.com. His monthly Injection Molding and Extrusion Business Indexes are available at www.ptonline.com.