The last two years have seen significant growth in plastic packaging markets, and while 1996 may not equal the same explosive levels, analysts say it should be a good year. Worldwide, the outlook for PET in particular is very good, with almost all experts predicting double-digit growth in the coming year; some even say the increase may reach 19-20 percent, spurred by food packaging.
Plastic continues to dominate food packaging markets, which could reach $23.17 billion worldwide by 2001, according to estimates from Frost and Sullivan, a London-based consultancy.
Stewart Scharf, equity analyst for Standard & Poors Corp. in New York, said packaging markets should benefit from stabilization of resin prices in the first quarter of 1996.
``With stable, or relatively stable, raw material costs, packaging markets should be healthy,'' he said, ``although competitive pressures could prevent widespread price increases.''
Scharf said mergers and acquisitions will continue in the packaging sector. Although, he added, the overall U.S. economy is somewhat sluggish, which would limit explosive growth.
Corporate consolidation by packaging industry giants continued in 1995, and should reach into this year, in both rigid and flexible packaging markets.
Two significant developments on the merger-and-acquisitions front, in particular, should have a profound effect. One is the merger of Philadelphia-based Crown Cork & Seal Co. Inc. with Paris-based giant CarnaudMetalbox SA. The merger will result in the formation of the largest packaging company in the world, with about $10 billion in annual sales. The companies have received approval from shareholders and the European Union, and should consummate the deal in the first quarter of this year.
On the film side of the business, the late-1995 purchase of Mobil Chemical Co.'s plastic division will add about $1 billion in annual sales to Evanston, Ill.-based Packaging Corp. of America. PCA, the packaging arm of Tenneco Inc. of Houston, will now be known as Tenneco Packaging Co.; the deal did not include Mobil's large business for oriented polypropylene films.
A prominent newcomer in the PET market, the Muncie, Ind.-based Ball Corp. will weigh in with significant capacity during the year. Ball, a giant in glass and metal container making, announced it will build two PET bottle plants to serve North American markets. The first, in Chino, Calif., is scheduled to begin production this year, and the other, in Syracuse, N.Y., will be on-line in late 1996 or early 1997.
Following soft drink and consumer goods makers' expansions in Asia and South America, Tim Burns, packaging analyst for CS First Boston Corp., predicted PET container shipments will rise from 24.6 billion units in 1995 to about 33.79 billion units in 1996.
In particular, Burns noted heavy investments in plastics machinery by Crown Cork to support customers such as Coca-Cola Co. in China, South America and Southeast Asia.
Burns, at a packaging review meeting in New York last fall, even went so far as to speculate that 1996 could be the beginningof the end for metal soft drink cans.
But Burns' observation was discounted at the same meeting by Crown Cork Chairman William Avery, who said that metal can sales remained strong and noted his company's and others' developments worldwide, including substantial can production, will increase.
In his predictions for 1996, Burns said that conversions to plastic packaging, and continued growth in the carbonated soft drink markets, will spur markets, and that rigid plastic containers will for the first time overtake cans as the predominant soft drink containers.
The continued expansion of PET container use, including conversions in Europe of containers from PVC containers, will be made easier by significant in-creases in PET resin production.
The trend toward convenience packaging of food items in plastic should continue, while improvements and more widespread use of coextrusion technologies will continue to push use of multilayered rigid and flexible packaging materials, which, in turn, makes possible the inclusion of more recycled plastic in applications that traditionally use virgin plastic.
``We expect that the use of recycled materials will grow, although it is very limited by the supply of clean regrind,'' said Thomas Rattray, associate director of environmental quality for Cincinnati-based Procter and Gamble Co.
P&G uses recycled content in much of its packaging, and has increased the content throughout 1995, following a cut early in the year that was the result of high prices and short supply.