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PE Market Film Analysis: Converter Film

By: James Callari 29. June 2015

 

Last year, approximately 1. 073.1 billion lb of PE resins were consumed in the production of sheet and tubing film, also referred to as converter film. With an average annual growth rate (AAGR) of 3.6%, PE resin consumption for the production of sheet and tubing film should reach 1.194 billion lb by 2017.

 

Several processing companies are periodically involved in the sheet and tubing market,manufacturing sheet and tubing on an “as needed basis” to fill capacity during slower periods of demand for other traditional PE film products. Other PE film extrusion companies reported manufacturing sheet and tubing intermittently according to specifications by film converters or end-use customers. Some participants in this market extrude film only, while others extrude film and also convert film into various packaging products.

 

These are among the conclusions of the most recent study of the PE Film market conducted by Mastio & Co., St. Joseph, Mo.

 

According to Mastio research, during 2014, the six largest sheet and tubing processors that participated in the company’s study were market were: Sigma Plastics Group; Apollo Management, L.P. (Berry Plastics Corp. Div.); Next Generation Films, Inc.; Emballages Polystar (Polystar Packaging Canada, Inc. Div.); Inteplast Group Ltd. (IBS Div.; Lone Star Plastics, Inc. Div.; Niaflex Corp. Div. & Trinity Plastics, Inc. Div.) and Inteplast Group Ltd. (P&O Packaging, L.L.C. Div.). Collectively, those processors gobbled up close to 50% of the material consumed in this market.

 

MATERIAL TRENDS

 

Overall consumption of LLDPE-butene, LLDPE-hexene, LLDPE-super hexene, LLDPE-octene, and mLLDPE resins have outpaced overall consumption of LDPE resin for the sheet and tubing market, according to Mastio research. LLDPE resins yield greater impact strength and puncture resistance in lower gauges than LDPE resin. High-clarity grades of LLDPE resin allows manufacturers to produce films with high optical properties in thinner gauges than was previously possible with LDPE/LLDPE resin blends. This has further eroded LDPE resin’s dominance in this market.

 

LDPE resins were the second most utilized material of choice for the production of sheet and tubing, either utilized alone, in blends, or in multi-layer film coextrusion. LDPE resin’s characteristics of high clarity, ease of processing, low relative costs, and adaptability of blending with other PE resins are some of the reasons for its greater use. LDPE-copolymers, such as LDPE-ethylene vinyl acetate copolymer (LDPE-EVA copolymer), LDPE-ethylene methyl acrylate copolymer (LDPE-EMA copolymer), and LDPE-ethylene acrylic acid copolymer (LDPE-EAA copolymer) resins will continue to be utilized in blends or in multi-layer film coextrusion with other PE resins.

 

Medium molecular weight-HDPE (MMW-HDPE) and high molecular weight-HDPE (HMW-HDPE) resins are extruded solely, in blends, or in film coextrusion with LDPE and LLDPE resins. HDPE resins allow even further downgauging, while providing even greater film strength than LLDPE resins. HDPE resin is also utilized as an additive in blends with LDPE or LLDPE resins, or as a processing aid to add stiffness and increase bubble stability in blown film extrusion. This is especially helpful in bubble diameters greater than 80 in. Additional benefits of utilizing HDPE resin are added barrier properties, excellent environmental stress crack resistance (ESCR), and greater ease for converting the film into finished bags or sacks. However, when implementing HDPE resin, some film clarity is sacrificed.

 

Other resins reported in the market during 2014 included the following: medium density PE (MDPE), polypropylene (PP), nylon, and ethylene-vinyl alcohol copolymer.

 

TECHNOLOGY TRENDS

 

During 2014, the 99.7% of film for the sheet and tubing market was produced utilizing the blown film process, accounting for 1,069.6 MM lbs. (99.7%) of resin consumption, states Mastio.  Cast film accounted for the rest. Monolayer sheet accounted for about 60.3% of PE resin consumption, with coextruded sheet representing the rest.

 

Improvements in both film coextrusion and PE resin technologies have greatly increased the sophistication of PE films. A greater variety of film characteristics are now possible, such as a three-layer form, fill and seal sheeting with different levels of coefficient of friction (COF). The film can have outside high cling, inside high slip, and a sandwiched layer of linear low density PE (LLDPE) resin manufactured using the metallocene single-site catalyst process (mLLDPE). The high cling side helps prevent the packaged product from shifting or slipping after being stacked. The one side high slip allows greater ease of inserting the product into the package. The inner layer of mLLDPE resin allows faster production rates by affording greater hot tack strength than conventionally produced PE resins.

 

Film downgauging is another advantage of film coextrusion technology, by allowing film processors to combine low density PE (LDPE) resin with stronger LLDPE or high density PE (HDPE) resins. Coextruded sheet and tubing film ranged from two-layer to seven-layer constructions, with the three-layer structure being the most typical.

 

MY TWO CENTS

 

Converter film is one market where complex film structures will continue to be developed as processors seek a means to distinguish their products from competitive offerings. Today’s three-layer structures will be tomorrow’s five-layer configurations, as suppliers of both materials and extrusion technology continue to push the envelope in product development. Another trend to watch is development of new equipment technologies that help processors switch from one product to another to minimize waste and allow them to more ready deal with lower-volume runs.

PE Film Market Analysis: Consumer Can Liners

By: James Callari 15. June 2015

 

The consumer trash bag market can be divided into the categories of national brand, private label, and generic market segments. All three types of bags can be purchased by consumers in a variety of places including grocery stores, mass merchandise stores, and discount stores. National brand and private label bags are usually sold at a higher price than generic bags. Typically, there is very little, if any, advertising to promote the generic bags, further helping to lower the costs to consumers.

 

In 2014, approximately 1.023 billion lb of PE resin were consumed in the production of consumer trash bags. By 2017, consumption of PE resin for the consumer trash bag market is expected to reach about 1.040 billion lb, with an average annual growth rate (AAGR) of 0.5%,.

 

These are among the conclusions of the most recent study of the PE Film market conducted by Mastio & Co., St. Joseph, Mo.

 

Many processors are producing consumer trash bags in designer colors, Mastio reports. Consumers can find trash bags in a variety of colors, ranging from soft pastels to something more bold and bright. Current trends are the determining factor in the availability of specialty hues. Also available are scented and odor blocking consumer trash bags. Vanilla, cinnamon and spring flowers are just a few of the scents that customers will encounter when shopping for kitchen or bathroom trash bags. Combining colors and scents has transformed consumer trash bags from just a common necessity to a decorative commodity.

 

According to Mastio, in 2014 the four largest consumer can liner processors wereClorox Co. (Glad) Manufacturing Co.; The Rank Group/Reynolds Consumer Products, Inc. Group (dba Presto Products Co. Div.); Poly-America, L.P. and Apollo Management, L.P. (Berry Plastics. Combined, Mastio says these companies consumed approximately about 67% of PE resin used in this market.

 

MATERIAL TRENDS

The resin most commonly utilized for consumer trash bags in 2014 was LLDPE, says Mastio. LLDPE resin provides added strength, puncture, and tear resistance over LDPE resin, which makes the bags less apt to puncture. Blending or coextrusion of LLDPE resins with LDPE materials allows processors to downgauge the film while maintaining or increasing the overall strength of the consumer trash bags.

 

The metallocene single-site catalyst based LLDPE (mLLDPE) resin is used to improve the strength and puncture resistance of consumer trash bags. When used in blends or in coextrusion with conventionally produced PE resins, mLLDPE resin greatly enhances the physical properties of the films in lower gauges. Other reported LLDPE resins utilized in this market include LLDPE-hexene, LLDPE-octene, LLDPE-butene, and recycled post-consumer LLDPE (PCR-LLDPE).

LDPE resins were the second most commonly consumed material in this market during 2014. LDPE resin, when utilized in blends or in coextrusion with LLDPE resin, adds to the overall appeal of the finished bags. LDPE resins have the greatest clarity of all grades of PE resin and give the film a higher surface gloss. Bag clarity can be important for custom tinted, semi-transparent bags used in recycling programs. Additionally, both LDPE-homopolymer and LDPE-ethylene-vinyl acetate copolymer (LDPE-EVA copolymer) grades, when used alone or in blends, have increased processing ease and improved seal characteristics. Other reported LDPE resins utilized in this market included LDPEethylene- methyl acrylate copolymer (LDPE-EMA copolymer) and LDPE-ethylene acrylic acid copolymer (LDPE-EAA copolymer).

 

High molecular weight-HDPE (HMW-HDPE) and medium molecular weight-HDPE (MMW-HDPE) resins were also utilized in 2014 yielding added strength to consumer trash bags. Consumer trash bags constructed with HDPE resin are three times stronger and more durable than LLDPE or LDPE trash bags of the same thickness. HDPE resin is more puncture-resistant and/or less apt to zipper if punctured vs. bags constructed with LDPE resin. Consumer trash bags constructed with HDPE have less surface gloss, are stiffer, and have less stretch than either LLDPE or LDPE bags. Additionally, HDPE resin requires specialized film extrusion equipment and is more difficult to process.

 

TECHNOLOGY TRENDS

 

In 2014, 100% of consumer can liners were produced by blown film extrusion Monolayer film construction was most prevalent accounting for about 95% of resin consumption for this market.

 

MY TWO CENTS

 

As with institutional can liners, the fact that this market is still so heavily dominated by single-layer structures is surprising, suggesting that products are being produced on older equipment. The challenge for consumer can liner makers is to produce more structures containing recycled materials. Some are having issues with getting their hands on material. Others, such as Aluf Plastics, have been using reclaimed material for years. As consumers and retail establishments place demands on manufacturers of all types to use reclaimed material, you’ll see more processors including post-consumer scrap in their products in the years ahead, either as a blend with prime resin in a single-layer structure, or as a core layer as more multi-layer capacity comes on stream.

PE Film Market Analysis: Institutional Can Liners

By: James Callari 2. June 2015

 

During 2014, approximately 1.398 billion lb. of PE was consumed in the production of institutional trash bags. With an average annual growth rate (AAGR) of 3.7%, this market is expected to increase to 1.561 billion lbs of PE resin consumption by 2017.

 

These are among the conclusions of the most recent study of the PE Film market conducted by Mastio & Co., St. Joseph, Mo.

 

Widths of institutional trash bags range from 13 to 69 in., with the most typical width being 30 in. Institutional trash bag lengths vary from 17 in. to 90 in., with the average length being 48 in. Institutional trash bag capacities range from 4 gal to 90 gal, with 33, 40, and 45 gal being the most common, Mastio notes.

 

Institutional trash bag film gauges range from 0.1 mil to 10 mils in the United States (U.S.) and 0.3 mil to 12.8 mils in Canada. Many producers stated there is not a typical gauge for institutional trash bags as the film gauge depends on the application, Mastio points out.

 

MATERIALS TRENDS

Many institutional can liner processors are beginning to use biodegradable resins such as polylactic acid (PLA) and synthetic polyesters in the production of institutional trash bags. PLA is a corn-derived biodegradable plastic that is designed to biodegrade in any standard compost bin.  That said, none of the processors who participated in the Mastio study reported any use of PLA resin in the production of can liners during 2014.

 

Mastio reports that the resin most commonly utilized for institutional trash bags in 2014 was LLDPE. LLDPE provides added strength and tear resistance over low density PE (LDPE) resin, which makes the film  less apt to puncture. LLDPE can be further down gauged without sacrificing strength. Various grades of LLDPE resins utilized in this market include the following: LLDPE-hexene, LLDPE-butene, LLDPE-octene, mLLDPE, and LLDPE-super hexene.

 

High density PE (HDPE) was the second most utilized material in this market during 2014. High molecular weight-HDPE (HMW-HDPE) and medium molecular weight-HDPE (MMW-HDPE) resins allow processors to manufacture institutional trash bags in thinner gauges that are about three times stronger and more durable than other trash bags constructed with LLDPE, LDPE, and/or medium density PE (MDPE), according to Mastio HDPE provides the highest level of puncture resistance of all PE resin material. However, HDPE requires more costly, specialized film extrusion equipment and is more difficult to extrude. Several film processors in this market lack the specialized film extrusion equipment needed to process HDPE materials.

 

Post-consumer reclaim was the third most commonly utilized material in the production of institutional trash bags during 2014. The reported utilization of PCR included post-industrial scrap resins consisting of PCR-LLDPE, PCR-LDPE and mixed PCR-PE (HDPE, LDPE, LLDPE and MDPE). Cost savings and adherence to mandates of PCR content by a few states, such as California; have also contributed to increased use of PCR in this market.

 

LDPE is also utilized in this market, mostly in blends with LLDPE and in multi-layer coextrusions. One advantage of utilizing LDPE resin is increased bag clarity, which is important for bags used in recycling programs. Also, LDPE resin, when used alone or in blends, has increased processing ease.

 

Utilization of LDPE-homopolymer, LDPE-ethylene-vinyl acetate copolymer (LDPE-EVA copolymer), and LDPE-ethylene-methyl acrylate copolymer (LDPE-EMA copolymer) grades were reported in this market during 2014.

 

TECHNOLOGY TRENDS

Monolayer blown film constructions remain the principal design for institutional trash bags, accounting for more than 94.3% of PE resin consumption.

 

MY TWO CENTS

It’s a bit surprising that monolayer structures are still the technology of choice in this market. It suggests to me that equipment assets in this market are aging. As more film-recycling streams start to develop, it’s possible that institutional liner companies will add more coextrusion capacity. As the report suggests, many are using PCR now, but apparently in blends with prime resin in single-layer structures.

 

Looking to Expand By Acquisition? Here’s How to Be a Better Buyer

By: James Callari 1. June 2015

 

In part one of this-three part blog series, we featured a Q&A with Deborah Douglas in which she offered tips on what plastics processors need to know to get more savvy on evaluating the worth of the their company. Her insights are both useful and timely in light of the spate of M&A activity in plastics processing of late.

 

Ms. Douglas is an expert on such matters.  She is the managing principal of Douglas Group, a St. Louis-based M&A firm that specializes in selling plastics processing companies. Ms. Douglas is a published author of two books, her most recentRipe: Harvesting the Value of Your Business. She is frequently asked to speak at varied industry and trade events and often serves as luncheon speaker for general business forums. She has been published in numerous trade and business periodicals including Plastics News, ISHN, The Wall Street Journal, Fortune Magazine, and Profit Magazine to name a few.

 

In part two, she provides tips on how owners of processing businesses can get better at selling. Here, in the final installment, Ms. Douglas discusses how processors can better prepare themselves for an acquisition.

Plastics Technology: What recommendations would you make to a plastics processors looking to acquire another processing operation?

 

Ms. Douglas: Success in acquisitions begins with doing the right acquisition.  Too often buyers don’t focus on what they really need to buy, to do a great transaction.  The great purchase isn’t determined at the date of closing.  The great purchase is the one you look back on five years from now, and say, “Boy, am I glad we did that!”

 

So the start of the process should be careful attention to what is the perfect seller to fit.  What are we missing that the perfect seller might provide us?  What talents or expertise or capabilities do we have that could be worth way more, if we acquired someone to give us new or special access to a market?  This beginning step to the acquisition process is actually probably the most important of all to eventual success.

 

As you begin to approach the potential sellers you identify, begin with courtesy, and carefully guarded confidentiality in the process.  There is no faster way to kill a possible deal than sloppiness about confidentiality.  You may damage the seller company, and you’ll almost certainly damage your chances for successful acquisition!

 

Plastics Technology: So relationship building is important?

 

Ms. Douglas: Be cognizant of the seller’s background and situation, and work to establish a warm relationship from the start.  We sold a company last year to an equity fund buyer who offered $32 million for the company.  At the same time, we had another offer for $35 million from a strategic buyer.   The strategic guys were from a large company and enjoyed telling our seller, “Your operation is interesting, but this is how we big guys do it.”  For our seller client it was worth losing $3 million of selling price on the deal to not sell to them.   He felt the equity guys would be better for his people, and better for his company long after he was gone.

 

We worked on a buy-side transaction for a plastics company based in Florida, who wanted a Midwestern operation with certain capabilities.  We found the perfect fit in outstate Arkansas.  The would-be seller was a Southern Baptist, who had told us as we talked that finding a “moral” buyer was important to him.  Furthermore, he told us he did not believe in drinking, or even in card playing, as he felt those were outside of “good moral” behavior.  Thus, we knew we were dealing with a very conservative guy, and we told our buyer client all we had learned. 

 

The buyer’s son met us at the Arkansas plant to try to cement the deal.  The son arrived wearing an “Elton John Aids Benefit” t-shirt, and came with a large mesh bag of beer-logo’d cups in tow as a gift.  As I sat inside the plant with the seller owner and watched the young man approach, I knew the deal was dead before he ever got to the door.  It’s worth the effort to try to establish the relationship with the seller.  You must have his goodwill to have a chance at success.

 

Plastics Technology: How important is speed and decisiveness is closing the deal?

 

Ms. Douglas: If you’re moving in the process toward a possible purchase, I would always encourage buyers to move quickly and decisively.  If you know your intended pricing, and you know you want to move, try to get a letter of intent in place as quickly as possible, with exclusivity if you can. If the seller is unwilling to commit firmly, do what you can to move forward quickly, even without a letter of intent.  The buyer who can close in 30 days instead of 90 makes a powerful impression on the seller, and may secure the deal for that alone.

 

Also, as a buyer, keep in mind that price alone should not be the sole decision point.  The right fit is far more critical to long term success than price.  That of course does not mean that money is no object.  If pushed too far, you may simply have to withdraw.  But I would tell you paying 20% more for the company that’s the ideal fit should not stop you. In the end, the fit will make the far greater difference to your satisfaction with the deal.

 

When you think you have agreed on pricing for the deal, and start to move forward in due diligence, this is a time when you will have near maximum contact with the owner seller.  It is a unique opportunity to establish relationships that will serve you especially well post sale.  Be respectful of confidentiality worries.  Be thorough in your due diligence, but do so without disrupting the seller operations.  That 30-90 day period while all of this goes on makes it far more likely (or less) that you’ll come to successful close, and can jump-start your new business together tremendously, if done right.

PE Film Market Analysis: T-Shirt Bags

By: James Callari 27. May 2015

Last year, processors consumed about approximately 1.35 billion lb of polyethylene to produce grocery sacks, also known as t-shirt bags. Though ban, taxes and other environmental roadblocks are seemingly never-ending threat, the market should experience modest growth of 1.6% a year through 2017, when PE consumption for T-shirt bags will reach 1.420 billion lb.These are among the conclusions of the most recent study of the PE Film market conducted by Mastio & Co., St. Joseph, Mo.

 

Plastic bags still face competition from paper bags, as some consumers believe paper makes for a more natural and environmentally safe bag, says Mastio. Truth be told, paper manufacturing pollutes the water, releases dioxininto the atmosphere, contributes to acid rain, and depletes the tree population, the study points out.

 

Moreover, Mastio states, PE t-shirt bags consume 40% less energy than paper when produced, and generate 80% less solid waste than paper bags. Fewer atmospheric emissions are produced and less waterborne wastes are released with PE t-shirt bag production compared to paper bag production.

 

Currently, reusable cloth sacks continue to make inroads into this market due to the pressure from several state and city governments. Many states and cities are in the process or have already enacted legislation on single-use, paper and plastic bags that varies from an all-out ban to imposing a tax or bag fee on each bag at the point of sale. As a result, many stores are now selling their own reusable cloth or plastic sacks to consumers, Mastio point outs.

 

MATERIALS TRENDS

 

T-shirt bags are made primarily of HMW-HDPE and MMW-HDPE. HMW-HDPE is the resin of choice due to its superior strength in thinner gauges than LLDPE or LDPE. HDPE resins, particularly

 

UHMW-HDPE and HMW-HDPE grades, maintain the desired strength levels when downgauged, and have very high impact resistance.

 

LLDPE and LDPE resins are utilized when there is a desire for a strong bag that has improved printing properties, a softer texture, and more surface gloss. The various grades of LLDPE resin utilized included the following: LLDPE-butene, LLDPE-hexene and LLDPE-octene. LDPE-homopolymer resin was also incorporated in the production of t-shirt bags. The cost and appearance are typically higher for LLDPE bags when compared to HDPE bags, and some bag strength is sacrificed. With the small operating margins that most grocery stores experience, HDPE bags are a more feasible economic choice.

 

TECHNOLOGY TRENDS

 

T-shirt bags are made via the blown film process. Some 20 or so years ago, most t-shirt bags were single layer. Last year, according to the Mastio report, nearly 72% of t-shirt sacks produced were coextrusions, generally three layer. On average, says Mastio, PE t-shirt bags used 30% less material today than bags made five years ago. Advances in the PE resins used to produce t-shirt bags have reduced material requirements without decreasing bag strength.

 

MY TWO CENTS

Equipment builders argue that too many processors are making do with older equipment when newer technology will permit them to produce better quality films at higher speeds. One industry source estimates that more than 70% of the 20 billion lb/yr of blown film is currently processed on equipment that’s 10 years old or older. But T-shirt bagmaking is a highly competitive market will razor-thin margins, making big capital equipment investments a big challenging.

 

That argument aside, if more processors followed the lead of Novolex (Hilex Poly), staving off environmental threats might be a bit less challenging. The firm made a huge commitment in setting up an infrastructure allowing to collect post-consumer film and reprocess it into new bags. Read that story here.




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