Prospects of production and demand for polypropylene material of the Spunlaid type until 2025.
The impact of Covid-19 on the global spunlade polypropylene nonwovens market in 2020 was, to put it mildly, dramatic. This market has entered the year facing many opportunities and challenges. The increase in production capacity caused by the introduction of new advanced technologies occurred against the background of slowing economic growth in many regions of the world. It was expected that after a prolonged period of growth, there would be a slowdown in economic growth, which was further facilitated by trade tensions and tariffs between the US and China. This, combined with a low birth rate and health concerns about the new coronavirus, has put additional pressure on the use of capacity entering the market. In addition, the business faced problems related to the transition to sustainable raw materials due to the expected release of relevant government regulations from around the world.
All these factors were radically relegated to the background when the consequences of Covid-19 were fully manifested. The industry was suddenly faced with a shortage of medical PPE, face masks and a sharp demand for all nonwovens used in the hygiene and medicine markets.
Concerns about oversupply in the market suddenly disappeared, and there was a complete reboot of the capacities for the production of polypropylene spunlade materials around the world. Many decommissioned lines have returned to service to meet demand. Profit increased due to the full loading of equipment and equalization of raw material costs in the middle of the year.
Not all nonwovens markets have benefited from Covid-19. The automotive segment and the household goods segment experienced a sharp drop in demand in the middle of the year, but began to recover in the third quarter of 2020.
Faced with an unprecedented surge in demand, suppliers and manufacturers of nonwoven polypropylene materials, along with manufacturers and suppliers of other nonwoven technologies, quickly responded to the demand by showing resourcefulness and ingenuity.
While the demand for masks and meltblown dominated the headlines, new capacities for the production of nonwoven polypropylene materials such as spunlade continued to grow at an impressive pace.
According to the most approximate estimates, about 210,000 tons of new capacity were commissioned in 2020. Of this amount, about 155,000 tons are accounted for by the Reicofil 5 technology. These capacities, ordered before the pandemic, quickly reached full capacity. In 2021, another 166,000 tons of new capacity were introduced, of which 136,000 tons belong to the Reicofil 5 technology. In the following years, the following growth in the use of Reicofil 5 technology is projected: 113,000 tons will be installed in 2022, then 55,000 tons in 2023 and 30,000 tons in 2024. In total, about 575,000 tons of spunlade capacity will be put into operation in the period 2020-2024. This will mean an increase in capacity by slightly more than 5% compared to the capacities of 2019. It is expected that additional capacities from a number of other technology suppliers will be installed during this period.
The spunlade polypropylene nonwovens business has achieved great success in developing new, more high-performance and reliable production technologies and a variety of innovative products that are attractive to the end consumer.
The hype of increased demand for these materials in 2021 will return to normal demand drivers in 2022. In this context, it is expected that the low birth rate in almost all regions of the world will affect the demand for baby diapers. The annual growth in demand for diapers and other products related to incontinence in adults will be from 5 to 6% during this period.
It can be expected that by 2024 there will be an oversupply in some regions of the world. In this case, the profitability of producers will decrease compared to current levels. Raw material costs will remain unstable and disproportionate between regions. In general, the cost of raw materials will contribute to growth. The demand caused by the pandemic will begin to decline from 2022. During 2022, previously decommissioned units of capacity will be stopped as new capacities enter the market and demand decreases.
The pace of investment in new capacities will slow down after 2024. Mainly, starting from 2024, the emphasis will be on upgrading existing installations and technologies in order to expand the capabilities of existing machines.
As in other regions, the capacity in North America is currently fully loaded. The growth in demand for baby diapers will soon slow down due to the accumulation of stocks associated with the pandemic, and will correspond to low birth rates on an annualized basis. The demand for products for adults suffering from urinary incontinence will continue to grow at a rate of 5-6% per year. It is expected that the rationalization of previously decommissioned capacities put into operation during the pandemic will occur in early 2022 as new production capacities enter the market and demand decreases. It is expected that the demand for polypropylene spunlade nonwovens in the medical, construction and technical segments will continue to be attractive, provided stable macroeconomic conditions and health conditions. It is expected that more than 120,000 tons of new capacity will be commissioned between 2021 and 2024, which corresponds to an annualized growth rate of 5%. In 2025, there will probably be an excess of production capacity. However, some manufacturers with aging capacities may need to invest in new technologies towards the end of the period, which will require the decommissioning of production technologies of previous generations.
In South America, there is a high capacity utilization associated with the pandemic. Fitesa commissioned the R5 machine with a passport capacity of about 30,000 tons in the second half of 2021 (Brazil). Production facilities are becoming obsolete, and economic trends in the region continue to improve. The demand for disposable hygiene products and nonwovens for other market segments tends to grow. Products for adults suffering from urinary incontinence have great growth potential in the future.
In Europe, 75,000 tons of new capacity entered the market in 2020, of which 50,000 tons were in Turkey (Gulsan, General Tekstil). Union and Innovatec together commissioned about 31,000 tons of production capacity in 2021. Gulsan will add 25,000 tons in the second half of 2022. Capacity utilization is expected to decrease in 2022, as capacity outstrips demand growth in both regional and export markets.
In the Middle East and North Africa, the surge in demand associated with the pandemic is providing much-needed higher capacity utilization in the region. Capacity utilization is expected to decrease in 2022, but only slightly.
In South Africa, PFNonwovens and Spunchem implemented several projects in 2020. Installation of additional capacities is not expected in the near future.
In South Asia, demand continues to grow as the market penetration of disposable nonwovens increases. Toray has commissioned a new Reicofil 4s line with an annual passport capacity of 20,000 tons at its new plant in India in Q4 2020. Global Nonwovens is expected to commission the R5 line with a capacity of about 30,000 tons in 2022. There are three lines in India with a total design capacity of about 70,000 tons per year. Avgol will put into operation the upgraded Reicofil 3.1 line, moved from Israel to a new plant in India in 2022. By 2025, more capacity will be installed in India from other technology and equipment suppliers, as demand will grow even faster. Capacity utilization in the region remains high and is complemented by imports from the Middle East, Asia-Pacific and China.
In the Asia-Pacific region, Fitesa/CNC commissioned the R5 installation in Thailand at the end of 2020. The annual passport capacity of this installation is about 30,000 tons. Asahi (Thailand) and Fibertex (Malaysia) commissioned separate lines in 2021, with a total annual passport capacity of 30,000 tons. Asahi closed its typhoon-damaged factory in Nobeoko, Japan, in 2020. This plant consisted of three lines with a total annual capacity of 26,000 tons. The Reicofil 3.1 line at this location was sold to Beautiful Nonwovens (China). Beautiful plans to re-commission this line at its Uniquetex plant in the USA. Demand in the region is growing. It is expected that further announcements of new production facilities in the region may appear only after 2023.
In China, at least 65,000 tons of new SB/SMS PP capacities and hundreds of autonomous meltblown production lines were commissioned in 2020. Many of these melt blowing lines have since been decommissioned, but about 100 or more continue to operate. In 2021, Jofo Wuxi and Allmed installed lines using Reicofil 5 technology. In 2021, new capacities of at least 50,000 tons were commissioned. Berry will install a new line in China in 2022 with an estimated annual passport capacity of 20,000 tons. It is expected that even more capacities will be installed in China in 2022–2025. Further, the annual growth in demand for spunlade polypropylene nonwovens of Chinese production will decrease compared to previous periods, which may affect capacity growth in the future.
Currently, the average annual growth in global demand in tons in the period from 2022 to 2025 will be about 5% per year. This forecast is sensitive to macroeconomic factors, epidemics, diseases and global unrest. Demand growth will be highest in South Asia (India) and Africa, followed by the Asia-Pacific region and China. Demand growth will be more moderate in the Americas, Europe and the Middle East.
It is expected that capacity growth will be higher than the demand for the product during this period, due to the desire to modernize technologies. This will necessitate the decommissioning of early-generation technologies to achieve greater utilization of new production capacities.
It is expected that the growth in demand for spunlade polypropylene nonwovens in South Asia, the Asia-Pacific region and China will be the highest in the world until 2025, and new capacities will be installed to meet this demand. At the same time, there is a risk that competitive pressure will lead to more capacity being added in these regions than is necessary.
The world's leading manufacturers have achieved and continue to actively develop improvements in the field of nonwoven polypropylene materials spunlade. The main directions of development relate to the production of materials with high tactile properties (softness) through the use of various additives, mechanical and rheological improvements in order to obtain thin filaments without compromising strength, the use of raw materials from "sustainable" sources or produced by "sustainable"; technologies for the manufacture of premium hygiene products. Energy efficiency, ergonomics and automation of production facilities, the absence of harmful emissions or by-products, as well as the possibility of returning production waste to the technological process will complement the above trends for many more years.