2005 was a tough year for suppliers of biaxally oriented polypropylene film-processing equipment in China.
Siegsdorf, Germany-based Bruckner Maschinenbau GmbH (Booth S514), which has installed half of the BOPP film lines in China, did not sell one that year. Tokyo-based Mitsubishi Heavy Industries Ltd., the second-largest player in the Chinese market, did not break the zero sales level, either.
``The demand for BOPP film in China is 1.4 [million] to 1.5 million tonnes per year, but the current capacity is already over 2 million,'' Bruckner marketing manager Christian Aigner said at Chinaplas in Shanghai.
This echoed the warning from the China Plastics Processing Industry Association. Just days before Chinaplas, Li Guojun, CPPIA deputy secretary general, said in a presentation in Shanghai that more than half the machines are kept idle. He warned about blind investment on production lines and the resulting overcapacity.
``Sales in China are lower than other countries at the moment,'' Aigner said.
He said it normally takes one to 1½ years from the time a line is purchased until it begins operating.
``When the capacity sold in 2003 and 2004 all came on stream, suddenly processors realized the surplus of capacity in the industry,'' said Aigner, explaining the downturn in 2005. Bruckner sold eight BOPP lines in 2003 in China, according to the company Web site.
Because of the overcapacity, prices of film products remain low. Meanwhile, soaring prices of raw materials squeezed margins and dampened film producers' confidence.
Yet, the Chinese market may show signs of recovery.
Bruckner already has sold a BOPP line in China this year. The 27-foot-wide line, with maximum speed of 1,485 feet per minute, will go to Zhejiang Hangzhou Xiaoshan Huayi Plastics Co. Ltd.
``We have seen increasing interest from customers in the first quarter of 2006,'' Aigner said. He estimated a 10-12 percent growth in China this year and said the capacity can go to exports, beyond domestic demand.
The utilization rate also is improving. Aigner said the rate averaged 55-60 percent in 2005 but has jumped to 70-75 percent in the beginning of 2006. According to CPPIA, 49 percent of the 184 BOPP lines in China were installed by Bruckner, 34 percent by Mitsubishi and 22 percent by DMT SA of St. Bourget du Lac, France.
In terms of capacity, 53 percent is from Bruckner, 37 percent from Mitsubishi and 8 percent from DMT.