Davi Price, partner, Price Hanna Associates03.10.22
Economic activity, as measured by year over year GDP growth, rose among the five Southeast Asian countries in 2021. Early expectations that economic conditions would bounce back strongly in 2021 were dampened upon the onset of Covid variants in the late second and third quarter. These Covid variants brought on a return to travel restrictions and particularly affected the first countries, which are dependent upon tourism. Governments reacted with still further stimulus spending to address economic impacts.
GDP growth results or most recent estimates in 2020, 2021 and the outlook for 2022 among the five Southeast Asian countries are shown in table one. China’s GDP growth is shown as well for comparison. All five countries showed positive GDP growth in 2021, but all labored through a difficult contraction in the third quarter as Covid-related restrictions fell upon the region. Fourth quarter GDP performance rebounded significantly, but recent forecasts for 2022 reflect caution over the possibility of further Covid impacts. In 2021, the Philippines outpaces GDP growth the five SEA countries. It was followed by Indonesia, Malaysia and Vietnam. The region’s largest economy, Thailand, recorded a weak 1.2% GDP growth rate. Thailand’s GDP performance reflects weakness in its large tourism business due to the impact of Covid on travel.
While economic uncertainty exists in the region for 2022, the overall outlook remains positive despite challenging regional and global issues. Achievement of forecasted GDP growth will depend upon the prevalence of Covid, vaccine distribution and the tactical control and management of sporadic Covid surges should they occur. Economic strength in China is expected to bolster the economic prospects in Southeast Asia by giving support to exports from the region into China. Trade and other tensions between China and the U.S., logistical bottlenecks, inflation and inflation control methods and other geo-political threats loom.
When evaluating GDP movements in what are still small economies, one must be aware that changes in GDP will result in larger year-over-year percent movements than those 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 among the Asian five countries was less significant than on the general economies of these countries. A surge in demand for medical PPE (gowns, masks) used in both domestically and for export bolstered nonwoven substrate production and converting, particularly in spunbonded and spunmelt technologies. As Covid variants 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. High demand for nonwovens used in PPE markets (wipes, gowns, masks) fostered higher than normal capacity utilization in 2021.
Southeast Asia remains an attractive region for nonwovens growth driven by favorable demographics, economic conditions, increasing market penetration and vibrant local and export market demand. The effects of Covid variants on manufacturing investment and consumer spending have, in many of the five Southeast Asian countries, been addressed by local governments using previously established and/or new economic stimulus programs.
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 these five markets as well as in their export markets. Over time, nonwovens producers in these countries are expected to benefit from good export demand from China, Japan and other countries both within and beyond 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 product 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 2021, 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 coarse denier spunbonded polypropylene needlepunched technology. Small but growing installations of other nonwoven technologies including carded air through bonded are also present.
During 2020 - 2023, fine denier spunbonded and spunmelt polypropylene nameplate capacity among the five Southeast Asian countries will grow an average of 9.5% CAGR from 260,000 tons in 2020 to 341,000 tons in 2023. Much of the 81,000 tons to be installed during this period had already been commissioned by year end 2020.
Fitesa/CNC commissioned a new Reicofil 5 line near the end of 2020 with an annual nameplate capacity of 33,000 tons. In the second half of 2021, Asahi Kasei commissioned a new line in Thailand with a capacity of 15,000 tons. During the same period, Fibertex Personal Care commissioned a Reicofil 5 line in Malaysia with an annual nameplate capacity of 15,000 tons. Together, Cobes Industries in Myanmar and Oceancash in Malaysia will commission fine denier spunmelt lines in 2022 which will amount to 18,000 tons of new nameplate capacity.
In 2020, the nameplate capacity of both fine and coarse denier spunbonded/spunmelt polypropylene technology in Southeast Asia accounted for about 9% of all global capacity in this technology category.
In 2023, we estimate the largest concentration of spunlaid polypropylene capacity among the five Southeast Asian countries will be in Thailand where 48% or 162,000 tons of capacity will be present among four different producers. In Malaysia, there will be three producers who will have a total capacity of 113,000 tons of this capacity in place which will account for 33% of the total capacity in Asian 5 block. In Indonesia, there will be two producers who have 52,000 tons of this capacity in operation which is equal to 15% of all capacity in the region. The remaining capacity of this technology in the region is in the Philippines.
Many of the largest producers of nonwovens in Southeast Asia use fine denier polypropylene spunbonded/spunmelt technology only and largely supply the hygiene market. Fibertex Personal Care, which commissioned a new line in third quarter of 2021 in Malaysia, was the largest nonwovens producer in SEA at the end of 2021 with capacity of 96,000 tons.
FitesaCNC in Thailand had 72,000 tons of fine denier capacity at the beginning of 2021 after commissioning a new line in Q4 2020. Asahi (Thailand) commissioned a new fine denier spunmelt line with a nameplate capacity of 15,000 tons in Q3 2021 bringing its total capacity to 55,000 tons. Mitsui in Thailand has a nameplate capacity of 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 has a 30,000 ton spunbonded polyester line up and running in Thailand 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, who was acquired by Solmax Quebec Canada in the first quarter of 2021, is the only producer of coarse denier spunbonded polypropylene nonwovens in Southeast Asia. These nonwovens are needlepunched and supply the geotextile market and other related end uses. Solmax’s annual nameplate capacity is 9000 tons and is unchanged since 1996.
Producers of carded air through bonded nonwovens in Southeast Asia include Oceancash 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 yet 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 was published in Q3 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.
GDP growth results or most recent estimates in 2020, 2021 and the outlook for 2022 among the five Southeast Asian countries are shown in table one. China’s GDP growth is shown as well for comparison. All five countries showed positive GDP growth in 2021, but all labored through a difficult contraction in the third quarter as Covid-related restrictions fell upon the region. Fourth quarter GDP performance rebounded significantly, but recent forecasts for 2022 reflect caution over the possibility of further Covid impacts. In 2021, the Philippines outpaces GDP growth the five SEA countries. It was followed by Indonesia, Malaysia and Vietnam. The region’s largest economy, Thailand, recorded a weak 1.2% GDP growth rate. Thailand’s GDP performance reflects weakness in its large tourism business due to the impact of Covid on travel.
While economic uncertainty exists in the region for 2022, the overall outlook remains positive despite challenging regional and global issues. Achievement of forecasted GDP growth will depend upon the prevalence of Covid, vaccine distribution and the tactical control and management of sporadic Covid surges should they occur. Economic strength in China is expected to bolster the economic prospects in Southeast Asia by giving support to exports from the region into China. Trade and other tensions between China and the U.S., logistical bottlenecks, inflation and inflation control methods and other geo-political threats loom.
When evaluating GDP movements in what are still small economies, one must be aware that changes in GDP will result in larger year-over-year percent movements than those 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 among the Asian five countries was less significant than on the general economies of these countries. A surge in demand for medical PPE (gowns, masks) used in both domestically and for export bolstered nonwoven substrate production and converting, particularly in spunbonded and spunmelt technologies. As Covid variants 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. High demand for nonwovens used in PPE markets (wipes, gowns, masks) fostered higher than normal capacity utilization in 2021.
Southeast Asia remains an attractive region for nonwovens growth driven by favorable demographics, economic conditions, increasing market penetration and vibrant local and export market demand. The effects of Covid variants on manufacturing investment and consumer spending have, in many of the five Southeast Asian countries, been addressed by local governments using previously established and/or new economic stimulus programs.
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 these five markets as well as in their export markets. Over time, nonwovens producers in these countries are expected to benefit from good export demand from China, Japan and other countries both within and beyond 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 product 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 2021, 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 coarse denier spunbonded polypropylene needlepunched technology. Small but growing installations of other nonwoven technologies including carded air through bonded are also present.
During 2020 - 2023, fine denier spunbonded and spunmelt polypropylene nameplate capacity among the five Southeast Asian countries will grow an average of 9.5% CAGR from 260,000 tons in 2020 to 341,000 tons in 2023. Much of the 81,000 tons to be installed during this period had already been commissioned by year end 2020.
Fitesa/CNC commissioned a new Reicofil 5 line near the end of 2020 with an annual nameplate capacity of 33,000 tons. In the second half of 2021, Asahi Kasei commissioned a new line in Thailand with a capacity of 15,000 tons. During the same period, Fibertex Personal Care commissioned a Reicofil 5 line in Malaysia with an annual nameplate capacity of 15,000 tons. Together, Cobes Industries in Myanmar and Oceancash in Malaysia will commission fine denier spunmelt lines in 2022 which will amount to 18,000 tons of new nameplate capacity.
In 2020, the nameplate capacity of both fine and coarse denier spunbonded/spunmelt polypropylene technology in Southeast Asia accounted for about 9% of all global capacity in this technology category.
In 2023, we estimate the largest concentration of spunlaid polypropylene capacity among the five Southeast Asian countries will be in Thailand where 48% or 162,000 tons of capacity will be present among four different producers. In Malaysia, there will be three producers who will have a total capacity of 113,000 tons of this capacity in place which will account for 33% of the total capacity in Asian 5 block. In Indonesia, there will be two producers who have 52,000 tons of this capacity in operation which is equal to 15% of all capacity in the region. The remaining capacity of this technology in the region is in the Philippines.
Many of the largest producers of nonwovens in Southeast Asia use fine denier polypropylene spunbonded/spunmelt technology only and largely supply the hygiene market. Fibertex Personal Care, which commissioned a new line in third quarter of 2021 in Malaysia, was the largest nonwovens producer in SEA at the end of 2021 with capacity of 96,000 tons.
FitesaCNC in Thailand had 72,000 tons of fine denier capacity at the beginning of 2021 after commissioning a new line in Q4 2020. Asahi (Thailand) commissioned a new fine denier spunmelt line with a nameplate capacity of 15,000 tons in Q3 2021 bringing its total capacity to 55,000 tons. Mitsui in Thailand has a nameplate capacity of 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 has a 30,000 ton spunbonded polyester line up and running in Thailand 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, who was acquired by Solmax Quebec Canada in the first quarter of 2021, is the only producer of coarse denier spunbonded polypropylene nonwovens in Southeast Asia. These nonwovens are needlepunched and supply the geotextile market and other related end uses. Solmax’s annual nameplate capacity is 9000 tons and is unchanged since 1996.
Producers of carded air through bonded nonwovens in Southeast Asia include Oceancash 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 yet 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 was published in Q3 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.
