David J. Price, Partner, Price Hanna Consultants LLC03.04.21
Understandably, economic activity, as measured by year over year GDP growth, fell among the five major Southeast Asian countries in 2020. The Coronavirus had a devastating impact on key industries among the Asian five group, particularly in those countries heavily dependent upon tourism. Like in nearly every country worldwide, the Coronavirus led to border closures, business lockdowns and a sharp rise in unemployment. Governments reacted with massive increases in stimulus and unemployment spending.
While economic uncertainty exists in the region surrounding prospects for 2021, the overall outlook is positive. Achievement of forecasted GDP growth will depend on the management of vaccine distribution, control of sporadic surges in virus cases and managing the exit from national border and internal lockdowns. Economic strength in China is expected to bolster the Asian five’s economic prospects giving support to exports from the Asian five countries into China. Global trade tensions between China and the U.S. faded with the onset of the Coronavirus and the change of administration in the United States.
Still preliminary estimates of 2020 GDP growth among the five key Southeast Asian countries are shown in table one. Only Vietnam recorded positive GDP growth over 2019, up 2.6%. The region’s largest economy, Indonesia, recorded a retraction of -2.4% after tracking ~5% annual growth since 2014.
In Malaysia, GDP growth was down -5.2%, following a weak performance in 2019 as compared to prior periods. In Thailand, GDP fell -6.4% in 2020 over 2019. The worst GDP retraction was recorded in the Philippines where GDP fell -9% in 2020. When evaluating GDP movements in what are still small economies, one must be aware that small changes in GDP will result in larger year over year percent movements than in larger economies. Annual GDP growth, as measured in year over year percent change, will ebb over time as the aggregate economies in each country become larger.
The Coronavirus impact on the nonwovens industry in the five Asian countries was somewhat less significant than on the general economies of these countries. A surge in demand for medical PPE (gowns, masks) for use both domestically, within the region and for export bolstered nonwoven substrate production. As it occurred in other countries around the world, demand for disinfectant and other wipes soared as did demand for hygiene products (diapers, et al.) due to consumer stockpiling.
Southeast Asia remains an attractive region for nonwoven growth driven by favorable demographics, economic conditions, increasing market penetration and vibrant local and export market demand. The near-term impacts of the economic slowdown in the region and their relatively minor effects on manufacturing investment and consumer spending are expected to be quickly addressed through economic stimulus programs, notwithstanding the uncertainty over the coronavirus.
Increasing market penetration for disposable and durable nonwovens in Southeast Asia and China, where market penetration is still low, is a positive predictive factor for good nonwoven demand growth in both the five key Asian markets and in their export markets as well. Over time, nonwovens producers in the Asian five countries are expected to benefit from good export demand from China, Japan and other countries in and outside the Asia-Pacific region. The largest market for converted nonwoven products will be in hygiene end uses followed by nonwovens used in durable geotextile and other markets.
Several global and regional disposable hygiene manufacturers have converting operations in Southeast Asia. These producers include Kimberly-Clark, Johnson & Johnson, Kao, Procter & Gamble and Unicharm. Increasing converting capacity in Southeast Asia speaks to demand growth in the region and the region’s popularity as a manufacturing base for exports to other Asian locales.
In 2020, nonwovens capacity in the region consists largely of spunbonded/spunmelt fine denier technology followed by carded staple fiber needlepunched and/or thermal bonded capacity, spunbonded polyester and medium denier spunbonded polypropylene needlepunched technology. Small but growing installations of other nonwovens technologies including carded air through bonded are also present.
During 2015–2020, the installation of fine denier spunbonded and spunmelt polypropylene nameplate capacity amongst the Asia five countries grew an average of 6.6% annually from 185,000 tons in 2015 to 255,000 tons in 2020. Of the 70,000 tons installed during this period, CNC/Fitesa (Thailand) installed 15,000 tons, Asahi (Thailand) and Toray (Indonesia) 20,000 tons each and Fibertex (Malaysia) 15,000 tons. Fitesa/CNC commissioned a new Reifenhauser 5 line near the end of 2020 with an annual nameplate capacity of 33,000 tons. In the second half of 2021, Asahi will begin installation of a new line in Thailand with a capacity of 15,000 tons. During the same period, Fibertex will commission a Reifenhauser 5 line in Malaysia with an annual nameplate capacity of 15,000 tons. Both of these lines will be fully commissioned in 2022. With these investments, fine denier spunlaid capacity will increase by 63,000 tons or 24.7%. This new capacity may result in a period of oversupply in the region.
In 2020, the nameplate capacity of both fine and medium denier spunbonded/spunmelt polypropylene technology in the Southeast Asia was 264,000 tons and accounts for about 7% of all global capacity in this technology category.
The largest concentration of this capacity is in Thailand where 43% or 114,000 tons of spunbond is now made by four producers. In Malaysia, two producers have a total capacity of 94,000 tons accounting for 36% of capacity in the region. In Indonesia, two producers make 52,000 tons or 20% of the region’s capacity. The Phillipines also has limited capacity in operation.
Most of the largest producers of nonwovens in Southeast Asia utilize fine denier polypropylene spunbonded/spunmelt technology only and largely supply the hygiene market. Fibertex in Malaysia was the largest nonwoven producer in Southeast Asia at the end of 2020 with capacity of 85,000 tons.
Asahi (Thailand) has 40,000 tons of fine denier spunbonded capacity in place at the beginning of 2021. FitesaCNC in Thailand has 72,000 tons of fine denier capacity at the beginning of 2021 and Mitsui in Thailand has 30,000 tons.
Spunbonded/spunmelt fine denier producers in Southeast Asia will remain heavily dependent upon exports to achieve acceptable levels of capacity utilization. Disposable nonwoven demand is growing but remains quite small compared to installed capacity within the region.
Unitika commissioned a 30,000 ton spunbonded polyester line in Thailand 2017 making it the sixth largest nonwoven producer in Southeast Asia. Nonwovens from this line will be used in carpet backing, geotextiles, roofing, automotive and other industrial applications.
Ten Cate is the only producer of medium denier spunbonded polypropylene nonwovens in Southeast Asia. These nonwovens are needlepunched and supply the geotextile market and other related end uses. Ten Cate’s annual nameplate capacity is 9000 tons and is unchanged since 1996.
Producers of carded air through bonded nonwovens in Southeast Asia include Ocean Cash in Malaysia, JNC in Thailand and Daiwabo in Indonesia. Nan Liu (China) which has announced the installation of new spunlaced and air through bonded lines in India has also announced that it will install new capacity in Vietnam. No timetable or technology has been announced. Nan Liu now manufactures air through and spunlaced nonwovens in China.
David J. Price is the author of the Price Hanna Consultants LLC annual subscription report “Spunbonded and Spunmelt Nonwoven Polypropylene World Capacities, Supply/Demand, Manufacturing Economics and Profitability”. The most recent report will be published in Q1 2021 covering the period 2015, 2020 - 2025. To obtain a detailed prospectus for this study, please contact Michele Scannapieco, Price Hanna Consultants LLC, at mscannapieco@pricehanna.com.
While economic uncertainty exists in the region surrounding prospects for 2021, the overall outlook is positive. Achievement of forecasted GDP growth will depend on the management of vaccine distribution, control of sporadic surges in virus cases and managing the exit from national border and internal lockdowns. Economic strength in China is expected to bolster the Asian five’s economic prospects giving support to exports from the Asian five countries into China. Global trade tensions between China and the U.S. faded with the onset of the Coronavirus and the change of administration in the United States.
Still preliminary estimates of 2020 GDP growth among the five key Southeast Asian countries are shown in table one. Only Vietnam recorded positive GDP growth over 2019, up 2.6%. The region’s largest economy, Indonesia, recorded a retraction of -2.4% after tracking ~5% annual growth since 2014.
In Malaysia, GDP growth was down -5.2%, following a weak performance in 2019 as compared to prior periods. In Thailand, GDP fell -6.4% in 2020 over 2019. The worst GDP retraction was recorded in the Philippines where GDP fell -9% in 2020. When evaluating GDP movements in what are still small economies, one must be aware that small changes in GDP will result in larger year over year percent movements than in larger economies. Annual GDP growth, as measured in year over year percent change, will ebb over time as the aggregate economies in each country become larger.
The Coronavirus impact on the nonwovens industry in the five Asian countries was somewhat less significant than on the general economies of these countries. A surge in demand for medical PPE (gowns, masks) for use both domestically, within the region and for export bolstered nonwoven substrate production. As it occurred in other countries around the world, demand for disinfectant and other wipes soared as did demand for hygiene products (diapers, et al.) due to consumer stockpiling.
Southeast Asia remains an attractive region for nonwoven growth driven by favorable demographics, economic conditions, increasing market penetration and vibrant local and export market demand. The near-term impacts of the economic slowdown in the region and their relatively minor effects on manufacturing investment and consumer spending are expected to be quickly addressed through economic stimulus programs, notwithstanding the uncertainty over the coronavirus.
Increasing market penetration for disposable and durable nonwovens in Southeast Asia and China, where market penetration is still low, is a positive predictive factor for good nonwoven demand growth in both the five key Asian markets and in their export markets as well. Over time, nonwovens producers in the Asian five countries are expected to benefit from good export demand from China, Japan and other countries in and outside the Asia-Pacific region. The largest market for converted nonwoven products will be in hygiene end uses followed by nonwovens used in durable geotextile and other markets.
Several global and regional disposable hygiene manufacturers have converting operations in Southeast Asia. These producers include Kimberly-Clark, Johnson & Johnson, Kao, Procter & Gamble and Unicharm. Increasing converting capacity in Southeast Asia speaks to demand growth in the region and the region’s popularity as a manufacturing base for exports to other Asian locales.
In 2020, nonwovens capacity in the region consists largely of spunbonded/spunmelt fine denier technology followed by carded staple fiber needlepunched and/or thermal bonded capacity, spunbonded polyester and medium denier spunbonded polypropylene needlepunched technology. Small but growing installations of other nonwovens technologies including carded air through bonded are also present.
During 2015–2020, the installation of fine denier spunbonded and spunmelt polypropylene nameplate capacity amongst the Asia five countries grew an average of 6.6% annually from 185,000 tons in 2015 to 255,000 tons in 2020. Of the 70,000 tons installed during this period, CNC/Fitesa (Thailand) installed 15,000 tons, Asahi (Thailand) and Toray (Indonesia) 20,000 tons each and Fibertex (Malaysia) 15,000 tons. Fitesa/CNC commissioned a new Reifenhauser 5 line near the end of 2020 with an annual nameplate capacity of 33,000 tons. In the second half of 2021, Asahi will begin installation of a new line in Thailand with a capacity of 15,000 tons. During the same period, Fibertex will commission a Reifenhauser 5 line in Malaysia with an annual nameplate capacity of 15,000 tons. Both of these lines will be fully commissioned in 2022. With these investments, fine denier spunlaid capacity will increase by 63,000 tons or 24.7%. This new capacity may result in a period of oversupply in the region.
In 2020, the nameplate capacity of both fine and medium denier spunbonded/spunmelt polypropylene technology in the Southeast Asia was 264,000 tons and accounts for about 7% of all global capacity in this technology category.
The largest concentration of this capacity is in Thailand where 43% or 114,000 tons of spunbond is now made by four producers. In Malaysia, two producers have a total capacity of 94,000 tons accounting for 36% of capacity in the region. In Indonesia, two producers make 52,000 tons or 20% of the region’s capacity. The Phillipines also has limited capacity in operation.
Most of the largest producers of nonwovens in Southeast Asia utilize fine denier polypropylene spunbonded/spunmelt technology only and largely supply the hygiene market. Fibertex in Malaysia was the largest nonwoven producer in Southeast Asia at the end of 2020 with capacity of 85,000 tons.
Asahi (Thailand) has 40,000 tons of fine denier spunbonded capacity in place at the beginning of 2021. FitesaCNC in Thailand has 72,000 tons of fine denier capacity at the beginning of 2021 and Mitsui in Thailand has 30,000 tons.
Spunbonded/spunmelt fine denier producers in Southeast Asia will remain heavily dependent upon exports to achieve acceptable levels of capacity utilization. Disposable nonwoven demand is growing but remains quite small compared to installed capacity within the region.
Unitika commissioned a 30,000 ton spunbonded polyester line in Thailand 2017 making it the sixth largest nonwoven producer in Southeast Asia. Nonwovens from this line will be used in carpet backing, geotextiles, roofing, automotive and other industrial applications.
Ten Cate is the only producer of medium denier spunbonded polypropylene nonwovens in Southeast Asia. These nonwovens are needlepunched and supply the geotextile market and other related end uses. Ten Cate’s annual nameplate capacity is 9000 tons and is unchanged since 1996.
Producers of carded air through bonded nonwovens in Southeast Asia include Ocean Cash in Malaysia, JNC in Thailand and Daiwabo in Indonesia. Nan Liu (China) which has announced the installation of new spunlaced and air through bonded lines in India has also announced that it will install new capacity in Vietnam. No timetable or technology has been announced. Nan Liu now manufactures air through and spunlaced nonwovens in China.
David J. Price is the author of the Price Hanna Consultants LLC annual subscription report “Spunbonded and Spunmelt Nonwoven Polypropylene World Capacities, Supply/Demand, Manufacturing Economics and Profitability”. The most recent report will be published in Q1 2021 covering the period 2015, 2020 - 2025. To obtain a detailed prospectus for this study, please contact Michele Scannapieco, Price Hanna Consultants LLC, at mscannapieco@pricehanna.com.
