BOPP film capacity in India

Company Capacity (KT - 2001)

Cosmo 37.5

Flex Ind 15

Max 9

Xpro (Biax) 5

Supreme Industry 2.5

Hindustan Adhesive 2.4

Kabra 2

MPUP 0.8

Total 74.2

Future Capacity plans for BOPP capacity (KT)

Cosmo 10

Flex Industry 12

Jindal Group 25

Nova Petrochem 25

New Capacities 72
India's largest manufacturer of BOPP film company Cosmo is a typical representative of new forces. This year the company publicly said it
would invest 2.2 billion rupees for expansion, to March 2010 and its BOPP Plastic Flexible production capacity from the current 5.8 million
tonnes to 13.8 million tons, while production capacity of laminating film to 22,000 tons from 18,000 tons. The company hopes to double its
revenue. Rise of the Middle East into a regional center.

However, despite this the industry continues to face many challenges. On the face of it this should be
an attractive, profitable industry with its high growth rates, a fragmented converter customer base
and high barriers to entry, but the reality is that there appears to be no shortage of capital to fund
new plants so that the business is continually plagued by over-investment resulting in persistent
oversupply, weak pricing and poor returns with an increasingly powerful and globalised customer
base.
 
Much of the new investment has and continues to be in China which is by far the largest market both
in terms of production and demand. Most of its production is geared to the local market, with
producers managing the supply/demand balance by operating at low rates or not all. Concerns that
Chinese producers will increasingly look to export to make their operations more viable, will probably
not be realised any time soon in AMI’s view, given continuing high growth in the Chinese market.
Chinese producers neither produce the grades nor have the sales infrastructure to sell extensively
overseas. 
The impact will more likely be felt in the export of goods in BOPP packaging or finished products such
as tape.
 
There is also growing investment in BOPP production in the Middle East with its access to low cost
sources of PP resin, which is more likely to impact on global trade as with relatively small local
markets and good export infrastructures they will seek to target markets in high cost regions like
Europe.
 
India has been another investment hotspot in recent years because of the enormous potential for
BOPP film packaging there. It has a population similar in size to that of China but BOPP demand is
currently a tenth of it. The flexible packaging industry has been developing very rapidly driven by
strong economic growth and a rising middle class looking for more sophisticated packaged food and
consumer goods.
Growth though is slowing in the markets of Western Europe, North America and Japan which will
present challenges to the BOPP producers there which also tend to operate older, slower, smaller lines
with higher costs. While packaging innovation, raw material and technology developments still tend to
be driven by BOPP players in these regions, market growth, and more importantly converting
operations are shifting to other lower cost regions of the world which will have implications for the
viability of BOPP production in the West.
 
While the industry undoubtedly faces challenges it does at least operate in the positive environment of
global growth continuing at over 6%/year supplying food and other packaging markets that are
considered essentials in modern life. Economic growth in emerging and developing countries, rising
standards of food safety and hygiene, growing demand for convenience and packaged foods and the
demands of feeding the world’s growing population driving the need for cost effective food distribution
and preservation, will all help to contribute to the growth in the global BOPP film market.