SCUP Report
Table of Contents
Abstract
This report discusses the two major categories of specialty films—engineering films and high performance films. Each category has the following major classes:
Engineering Films
- Polyester
- Nylon
- Polycarbonate
High Performance Films
- Fluoropolymer
- Polyimide
- Polyethylene Naphthalate
- Cyclo-olefin Copolymer
- Developmental
Although they are consumed in much lower quantities than engineering films, high performance films receive greater emphasis in this report because of their high prices and high value in use. Developmental films are a subset of high performance films that includes a variety of commercial and semicommercial films with low annual consumption volumes and high selling prices. The term developmental does not necessarily refer to product life cycle position, but also reflects the films' niche market status. Most of these films are performance driven and encounter relatively low levels of intermaterial competition.
Major manufacturers (fabricators) are usually back-integrated operations that use captively produced resins to make specialty films. Approximately twenty major worldwide fabricators account for more than 80% (by weight and value) of the total manufacture of specialty films in the United States, Western Europe, Japan and China.
The market for specialty films is driven both by technology-push (base polymer producers) and by market-pull (film users). Producers are motivated to reach minimum economic volumes for high performance polymers and, at some point, film performance properties are matched with existing or new market needs.
The following pie chart shows consumption of specialty films in the four major regions, on a value basis:
The current economic recession began in the United States in the fourth quarter of 2007, and as of the writing of this report, it may or may not be continuing. Nevertheless, consumption growth for nearly all resins and films essentially came to a halt during 2008 and for several, even showed year-over-year declines. Numbers for 2009 to date have showed significant consumption drops for these materials—in some cases 10% or more. While industry observers expect consumption growth to resume, they differ on when and at what rate. For most of the materials covered in this report, we have assumed that in the United States, consumption growth will resume in the latter half of 2010, but at levels reduced from the historical rates. Growth rates are expected to recover to historical norms during 2011 or 2012. Thus, under this scenario, 2008 consumption levels for many of the materials will not be achieved until 2012 or 2013.
The United States fabricates and consumes the largest total volume of specialty films. U.S. exports to other world regions are substantial for some types of film such as polyester, polycarbonate, polyimides and fluoropolymers. Imports of polyester film from Japan, the Republic of Korea and Taiwan are also significant.
Although suppliers of engineering films are well-established in Europe, the high-performance film industry is not yet well-developed. Imports account for a significant portion of fluoropolymer film and PEN film consumption and virtually all of polyimide and LCP film demand.
Japanese companies are displaying an increasing interest in polyimide and developmental films in particular. Unlike their U.S. and Western European competitors, some large Japanese film fabricators make films from purchased resins. Toray Industries, together with its affiliated companies, is the recognized leader in the Japanese specialty films business. The number of strategic alliances between Japanese fabricators and Western partners is significant and increasing.
The Chinese market, while large and rapidly growing, is still in its developing phase. Although numerous converters exist and the number continues to grow, imports of specialty films represent a major portion of supply.
Compared with other businesses covered in this report, the polyester film business is large, global and very competitive. A large number of companies supply polyester film, and some, such as DuPont Teijin/Teijin DuPont, Mitsubishi, and Toray, maintain fabrication facilities in more than one region. The polyester film business is truly global in nature, and its globalization is increasing through the formation of international joint ventures between some of the largest regional suppliers. In recent years, however, the attractiveness of the polyester film business has diminished because of slow growth prospects in major markets and weak profitability resulting from worldwide overcapacity and the entrance of new competitors in developing countries.
Dominated by regional players, the nylon film business is less global than most of the other classes of specialty films. Competition from polyethylene terephthalate (PET) in the flexible packaging markets for unoriented and monoaxially oriented nylon film escalated because of declining raw material prices and an oversupplied global market for PET. Consumption of biaxially oriented nylon film is steadily growing, particularly for food packaging.