As the first quarter 2022 ends, the world is beginning to experience some reduction in Covid-19 cases and its variants while isolated spikes continue to arise. At the same time, the world is left with Covid impacts on world economics explicitly in supply chain disruptions and high inflation. Still further, the invasion of Ukraine by Russia creates short- and long-term impacts on global trade and economics. Against this backdrop, the global spunbonded and spunmelt polypropylene business continues to expand alongside market corrections and volatility in nearly all global markets.

The impact of Covid on the global spunlaid polypropylene nonwoven market in 2020 was dramatic, and it was followed by a market correction which lowered demand in the second half of 2021 as Covid subsided. Just as supply chain disruptions and Covid-related surge demand began to normalize in early 2022, Russia invaded Ukraine bringing concern to the global population. This added impetus to smoldering inflation and other latent threats to the global economic system. Russia’s action will impact energy, raw materials, and global economics for some time.

The global spunbonded/spunmelt polypropylene market now faces a period of both opportunities and challenges. In addition to the near-term economic disruptions caused by Russia’s invasion of Ukraine, falling birthrates across most global regions, mounting inflation, rising interest rates, and simmering geopolitical tensions could result in further downward pressure on global demand. Remarkable progress has and continues to be made to adopt sustainable raw materials in the manufacture of nonwovens, but this may face headwinds as societies address war and economic concerns over environmental care. While there are uncertainties, the industry is resilient and able to successfully react to challenges and needs as witnessed during the onset and tenure of the Covid crisis.

Global Capacity/Demand

In 2022, rising capacity is entering the market brought about by the installation of new highly advanced technology and reaction to Covid surge demand. We estimate that about 159,000 tons of new capacity were commissioned in 2021, much of which was Reicofil 5 technology. This capacity, ordered in advance of the pandemic, quickly achieved full capacity utilization. We estimate that about 192,000 tons of new capacity will be commissioned in 2022 bringing capacity to about 5,308.8 kilotons. Much of this capacity was ordered in late 2020 as Covid infections raged. Some of this capacity, which may have otherwise been commissioned in 2021, faced delays in being commissioned due to supply chain disruptions, travel restrictions hindering technicians to make installations and the sheer volume of new equipment ordered awaiting to be installed.

In 2023, we estimate another 128,000 tons of new capacity will be commissioned. In total, we judge that about 502,000 tons of spunlaid capacity will be commissioned during the period 2021 - 2025. This would represent an increase in capacity of just over 10% over that present in 2020.

The spunlaid polypropylene nonwoven business has made great strides in developing new, highly productive, and reliable manufacturing technology and a variety of product innovations attractive to end-use consumers. Producers of this technology around the world continue to install the most modern generation of technology to gain product and productivity benefits, notwithstanding the impact that these large increments of new capacity have on market capacity utilization.

Demand began to decline in late third quarter 2021 and more sharply in fourth quarter 2021. We expect demand to continue to decline moderately through 2022 as compared to that in 2021. We expect demand and year-over-year growth to normalize in 2023 and return to being driven by normal demand drivers. In that context, we expect that low birth rates in nearly all global regions will weigh on baby diaper demand. We expect year-over-year annual adult incontinence demand growth to range from 5-6% during the period.

At present, we expect average annual global demand growth in tonnes from 2021 - 2026 to be around 5% annually. This outlook is sensitive to macroeconomic factors, disease shocks and global unrest. Demand growth will be the highest in Southern Asia (India) and Africa followed by that in Asia-Pacific and China. Demand growth will be more moderate in North & South America, Greater Europe, and the Middle East.

Oversupply can be expected to arise in selective global regions by 2024 as the full effect of new capacity becomes fully present in the market. Offsetting this increase in capacity will be the likely shutdown of earlier generation technology recommissioned during the pandemic surge. As is always the case, new capacity will be operated in favor of older generation technology. Raw material costs will remain volatile and disproportionate among regions. In general, we expect raw material costs to favor the upside.

Against this backdrop, we think investment in plant and equipment could slow once the next round of investment occurs in 2024 due to uncertainty and rising investment costs. This expectation could be impacted by the decommissioning of earlier generation capacity. We also expect that upgrades to existing capacity may occur to enhance the capability of existing machines.

North America Capacity & Demand

In North America, only ~12 kt of new capacity was commissioned in 2021, a portion of which was capacity that had been shut down, sold, and then recommissioned. During 2022 - 2024, 81,000 tonnes of new capacity are now expected to enter the market from installations which will be commissioned during 2022 - 2023. This capacity was ordered in the first half of 2021. No new capacity has since been announced.

Capacity in North America was fully utilized during the first half of 2021 but began to weaken in the third quarter as pandemic-related demand slowed. We expect demand growth to further weaken but not dramatically in the near term as Covid effects subside. We expect hygiene demand to be static with baby diaper demand in line with low year-over-year birth rates. We expect demand for adult incontinence products to continue to grow at a 5 - 6% annual rate. We expect healthcare demand to remain above pre-pandemic levels during 2023 - 2024 due to a shift from Covid hospitalizations to a rise in delayed elective surgeries. Demand in construction and technical specialty markets may be attractive but could face downward economic pressure. We think capacity utilization will weaken, but not significantly so, during the period as new capacity enters and rationalization of formerly decommissioned capacity brought into service during the pandemic occurs. While overcapacity is likely to be present during the period, some producers may replace early- with late-generation technology. We expect year-end 2023 nameplate capacity to total 892.2 kt.

South & Central America Capacity & Demand

In South America, pandemic-related capacity utilization was high with excess capacity for hygiene supplying low barrier spunmelt nonwoven substrate needs for examination, testing and isolation gowns. Fitesa Brazil commissioned a Reicofil 5 (R5) machine with a nameplate capacity of about 30,000 tonnes in the second half of 2021. No other large-scale capacity line installations occurred or have been announced. Selected producer capacity is aging. Demand for disposable hygiene and other nonwoven markets is trending higher. Adult incontinence products hold strong future growth potential. We expect additional capacity to be added before the end of the period to serve growing demand and modernize the existing technology base. We expect year-end 2023 nameplate capacity to total 360.5 kt.

Greater Europe Including Turkey & Russia Capacity & Demand

In Greater Europe, Union (Italy) and Innovatec (Germany) together commissioned about 31,000 tonnes of R5 capacity in 2021. For comparison, 50,000 tonnes were commissioned in 2020. Gulsan (Turkey) will add 25,000 tonnes in the second half of 2022, and Avgol (Russia) will add 20,000 tonnes in the first half of 2024. Capacity utilization was high during much of 2021 due to the pandemic surge and weakened in the last months of the year. We expect demand to further weaken to more normalized pre-pandemic levels in 2022 - 2023 as capacity outpaces demand growth in both regional and export markets. We expect year-end 2023 nameplate capacity to total 1,132.4 kt.

Middle East & Africa Capacity & Demand

In the Middle East and North Africa (MENA), the pandemic-related demand surge provided much needed higher capacity utilization in the region in 2020 through the first half of 2021. We expect capacity utilization to decline, but not significantly so, in 2022 and through the period due to new capacity installations by Gulsan (Egypt) and PFNonwovens (South Africa). We do not include Iran in our analysis of the MENA region. The installation of advanced technology by Baftineh in Iran in the second half of 2020 has modernized the company’s technology platform and added product capabilities to its portfolio.

In North Africa, Gulsan (Egypt) will commission a Reicofil 5 line with a nameplate capacity of 25,000 tonnes in Q1 2023. This installation brings the number of lines operated by Gulsan in Egypt to three. PFNonwovens will add 15,000 tonnes of capacity with a R5 installation in 2023 in South Africa. We expect year-end 2023 nameplate capacity in the Middle East to total 216.5 kt and 169.0 kt in all of Africa.

Southern Asia Capacity & Demand

In Southern Asia, demand continues to grow as the market penetration of disposable nonwovens continues to increase. Toray commissioned a new Reicofil 4s line with an annual nameplate capacity of 20,000 tonnes in its new plant in India in Q4 2020. Global Nonwovens is expected to commission a R5 line with a capacity of about 30,000 tonnes in the second half of 2022. This will result in Global Nonwovens having three lines with a total nameplate capacity of about 70,000 tonnes/year in India. Avgol will commission an upgraded Reicofil 3.1 line moved from Israel to a second new plant in India in the second half of 2022. A third R5 machine will be installed in Southern Asia by a new producer which will have a capacity of 15,000 tonnes to serve healthcare and hygiene markets. We suspect there will be more capacity installed in India before 2026 as demand growth moves higher. Capacity utilization remains high in the region and is supplemented with imports from Middle East, Asia-Pacific and China-based producers. We expect year-end 2023 nameplate capacity to total 239.0 kt.

Asia-Pacific Capacity & Demand

In Asia-Pacific, Fitesa/CNC commissioned a R5 machine in Thailand at year-end 2020. This machine has an annual nameplate capacity of ~30,000 tonnes. Asahi (Thailand) commissioned a line with a capacity of 15,000 tonnes in Q3 2021. Fibertex (Malaysia) commissioned a R5 line in Q1 2022 which has a nameplate capacity of 15,000 tonnes. Asahi closed its typhoon-damaged plant in Nobeoko, Japan, in 2020. This plant contained three lines with a total annual capacity of 26,000 tonnes. A Reicofil 3.1 line at this location was sold to Beautiful Nonwovens (China). Beautiful will reportedly recommission this line at its Uniquetex plant in the U.S. New lines will also be commissioned by Cobes Industries in Myanmar in Q3 2022 and Hanil (South Korea). Demand in the region is growing but more slowing than prior periods. We expect that further capacity announcements in the region may not occur until after 2023. We expect year-end 2023 nameplate capacity to total 523.0 kt.

China Capacity & Demand

In China, we estimate that 129,000 tonnes of new PP SB/SMS capacity will be commissioned in 2022. Included in this estimate are new capacity installations by Jofo Wuxi, Berry and Allmed who will all commission R5 technology. China seems to be gearing up to add much more new capacity to supply nonwoven substrates for surgical gowns and drapes to the world despite localization talk. While we expect more capacity will be installed in China during 2021 - 2026, we estimate annual demand growth for Chinese-made spunlaid polypropylene nonwovens to soften as compared to prior periods, which could impact future capacity growth. We estimate year-end 2023 nameplate capacity to total 1,943.7 kt.



David J. Price is the author of the Price Hanna Consultants LLC report “Spunbonded and Spunmelt Nonwoven Polypropylene World Capacities, Supply/Demand, Manufacturing Economics and Profitability.” Our latest report on this topic was published in July 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 or visit our website www.pricehanna.com.