AWA Alexander Watson Associates provides a summary of preliminary market data from its new study on extrusion coating
The extrusion coating industry value chain is complex, involving a variety of supply sources – for raw materials and chemicals, coating and lamination, conversion, and end users.
There are two main divisions in the supply of extrusion coated materials:
Extrusion coating by specialist converters
Extrusion coating by commercial converters
Integrated with raw materials production
We identify some 145 companies extrusion coating in Europe, many with multiple units, and many of whom produce a variety of products for different markets.
The markets where extrusion coated materials are used are diverse, ranging from liquid packaging and flexible packaging for both foods and non foods, through photographic/graphic applications, to industrial and commercial applications in the building, medical/hygiene, and envelopes markets.
The extrusion coating market has developed along regional lines, with each region remaining more or less autonomous, and with Europe and North America taking similar market share.
The European market
We estimate that the total European market for extrusion coated and/or laminated materials is around 23 billion square metres, of which the majority are used in flexible and liquid packaging applications. Demand is forecast to continue to rise by an average 2 per cent per annum, but there are differences between the end use market segments.
Main market trends
MARKET ANNUAL CHANGE 2006-2009
Flexible Packaging + 2.5 per cent
Liquid Packaging + 1.0 per cent
Photographic + 1.0 per cent
Commercial + 1.5 per cent
TOTAL + 2.0 per cent
Four main end use market segments dominate in extrusion coating applications:
Today, flexible packaging has the largest market share in volume terms, followed by commercial applications – such as release liners, folding cartons, envelopes, medical/hygiene, building and insulation, overlaminating – and liquid packaging. Photographic applications represent the remaining volume.
In the more ‘traditional’ market areas such as photographic prints, ovenable boards, release liner, envelopes and the medical sector, eastern Europe currently has a very limited share – but it is more strongly represented in bulk markets such as liquid packaging, mill wrappers, sacks, and flexible packaging. Linked to the developing economic platform in eastern Europe, these latter applications are where the continuing growth is to be expected.
Extrusion coated/laminated materials account for an estimated 20-30 per cent of all flexible packaging structures in Europe today – most of them complex laminates employing films and aluminium foils. Growth is highest in applications such as stand-up pouches and high barrier laminates, and major end use growth sectors include fresh foods, pharmaceuticals and personal care products packaging.
Over 70 per cent of the market is serviced by flexible packaging converters with an in-house extrusion coating/lamination facility.
Continuing annual growth of 2.5 per cent is forecast – lower than historically. Changing market demands involving shorter print runs required at more frequent intervals may favour adhesive lamination over the complicated set-up of extrusion coating equipment.
Extrusion coating enhances the performance of papers and boards, and these two materials continue to account for some 70 per cent of all materials used in general commercial applications.
Polymer coated boards account for 7 per cent of the total folding cartonboard market, used predominantly for frozen and chilled food packaging. Usage in petfood and detergent packaging is reducing as alternative package choices, eg, pouches, gain in popularity; and this competition, coupled with price pressures from brand owners and retail groups, is impacting margins in this segment.
Eighty per cent of the folding carton business is controlled by the board mills, most of whom have in-house extrusion coating/laminating facilities.
Three main developments have driven demand for extrusion coated liquid packaging. Wax impregnation of milk cartons was replaced by two sides extrusion coating – still a major packaging format for pasteurized milk; sterilization was developed for the production of aluminium laminated/coated paperboard aseptic packaging for UHT milk and juices; and, more recently, aluminium foil is being replaced with oxygen barrier polymers in extrusion coating for long shelf life food packaging.
Demand has declined in this speciality market, but photo quality inkjet printed digital graphics requiring a moisture barrier coating may help to promote a recovery.
Substrate and polymer trends
For substrates, films and other materials – generally non wovens – are showing strong growth trends, while foils, boards and paper are growing at a rate below the industry average.
MATERIAL ANNUAL CHANGE 2006-2009
Boards +1.0 per cent
Papers +1.0 per cent
Films +2.5 per cent
Aluminium Foils +0.5 per cent
Other Materials +2.0 per cent
Polymers +1.5 per cent
TOTAL +1.5 per cent
LDPE – low density polyethylene – was the original extrusion coating polymer and remains the most widely used component today by virtue of the cost and performance in terms of heat seal, moisture barrier and grease resistance.
Market shares of the polymers used in the major market segments are shown in the following exhibit:
Today, Europe takes a decreasing share of global PE resin capacity. Demand growth is comparatively low, and competition within the market is very high.
Europe is an easy target for exports from the Middle East, and it is estimated that more than 50 per cent of all Europe’s PE imports will come from the Middle East by 2011.
Threats and opportunities
In a manufacturing industry with a high volume focus such as extrusion coating, competitive pressures are strong, with cost reduction a major end user demand, particularly for retail products. Rising raw material and energy costs, coupled with increasing environmental concerns, add to these pressures.
However, there is a move away from commodity, high volume products, to added value specialities, particularly in packaging applications, and this trend is supported by an increasingly global manufacturing base. As well as changing the product focus, increasing internationalization is better able to serve the needs of major global brand manufacturers and retail consortia.
As well as consolidation across the extrusion coating value chain, we are also seeing evidence of the establishment of exclusive manufacturing arrangements and partnerships to deliver the differentiation required in high volume consumer brand packaging.
All data preliminary, subject to change, and published in good faith.
AWA multi client market reports
AWA publishes a series of in depth multi client market reports worldwide at regular intervals. Established study platforms include, among others, release liner, labelling and product decoration, selfadhesive graphic arts, metallized papers and films, and others, as well as extrusion coating. Additionally, AWA’s established series of AWAreness Reports is designed to meet the needs of business executives making first stage evaluations of new market opportunities with concise, focused, up to the minute briefings on industry ‘hot topics’.
AWAccess is a major new product in the portfolio of market information platforms available from AWA. For clients who need continuous, on-going access to market data to facilitate short, medium, and long term strategic thinking, AWAccess provides a special subscription service which offers many features and benefits through on-line access to all AWA’s published studies.
AWA Alexander Watson Associates: company profile
AWA Alexander Watson Associates is a global business to business market research, publishing, and consulting company with an exceptional focus on the speciality packaging, coating and converting industries. It has a reputation for providing focused, practical, reliable and cost effective information through published multi client market reports, as well as commissioned private client studies, consulting and advisory services; and through AWA Conferences & Events, with conferences, workshops and training programmes.
Established in the UK in 1971 by Alexander Watson, the company was acquired by Corey M Reardon in September, 1999 and is now headquartered in Amsterdam, The Netherlands, with a North American office in McLean, Virginia, USA. Corey Reardon brings more than 20 years’ experience in market leading companies in the industries served by AWA to his current rôle as president and ceo.
AWA conferences and events
AWA Conferences & Events expands AWA’s platform of expert services for the speciality packaging, coating and converting industry with dedicated events, which are particularly valued for the industry networking opportunities they provide, as well as for their in depth content.
AWA Alexander Watson Associates
External weblinksConverting Today is not responsible for the content of external internet sites.AWA Alexander Watson Associates