Nonwovens Capacity and Demand Development in Southeast Asia 5 – Nonwovens Industry Magazine

Economic activity, measured by year-on-year GDP growth, increased in all five Southeast Asian countries in 2021. Early expectations that economic conditions would rebound strongly in 2021 were mitigated by the appearance of the Covid variants at the end of the second and third quarters. These variants of Covid have led to a return to travel restrictions and have particularly affected the first countries, which are dependent on tourism. Governments have responded by deploying even more stimulus spending to deal with the economic impacts.

GDP growth results or latest estimates in 2020, 2021 and outlook for 2022 among the five Southeast Asian countries are shown in Table 1. China’s GDP growth is also shown to compare. All five countries posted positive GDP growth in 2021, but all weathered a tough contraction in the third quarter as Covid-related restrictions fell on the region. Fourth-quarter GDP performance has rebounded significantly, but recent forecasts for 2022 reflect caution about the possibility of further Covid impacts. In 2021, the Philippines exceeds the GDP growth of the five SEA countries. It was followed by Indonesia, Malaysia and Vietnam. The region’s largest economy, Thailand, recorded a low GDP growth rate of 1.2%. Thailand’s GDP performance reflects weakness in its large tourism business due to the impact of Covid on travel.

Although economic uncertainty exists in the region for 2022, the overall outlook remains positive despite challenging regional and global issues. Achieving projected GDP growth will depend on the prevalence of Covid, the distribution of vaccines and the tactical control and management of sporadic Covid surges if they occur. China’s economic strength is expected to bolster economic prospects in Southeast Asia by supporting the region’s exports to China. Trade and other tensions between China and the United States, logistical bottlenecks, inflation and inflation control methods and other geopolitical threats loom.

When assessing GDP movements in what are still small economies, one should be aware that changes in GDP will result in larger percentage movements from year to year than those in large economies. Annual GDP growth, measured as a percentage change from year to year, will decline over time as each country’s overall economies become larger.

The impact of the coronavirus on the nonwovens industry among the five Asian countries has been less significant than on the general economies of these countries. An increase in demand for medical PPE (gowns, masks) used both domestically and for export has bolstered the production and processing of nonwoven substrates, especially in spunbonded and spunbonded technologies. As variants of Covid occurred in other countries around the world, demand for sanitizers and other wipes skyrocketed, as did demand for hygiene products (diapers, etc.) due to consumer stockpiling. Strong demand for nonwovens used in PPE markets (wipes, gowns, masks) supported above-normal capacity utilization in 2021.

Southeast Asia remains an attractive region for nonwovens growth, driven by favorable demographics and economic conditions, growing market penetration and dynamic demand from local and export markets. 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 packages .

Increasing market penetration of disposable and durable nonwovens in Southeast Asia and China, where market penetration is still low, is a positive predictor for good growth in nonwovens demand in 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 within and beyond the Asia-Pacific region. The largest market for converted nonwovens will be for hygienic end uses, followed by nonwovens used in sustainable geotextiles and other markets.

Several global and regional manufacturers of disposable hygiene products have conversion operations in Southeast Asia. These producers include Kimberly-Clark, Johnson & Johnson, Kao, Procter & Gamble, and Unicharm. The increase in conversion capacity in Southeast Asia is a testament to growing demand in the region and the region’s popularity as a manufacturing base for exports to other Asian destinations.

In 2021, nonwovens capacity in the region largely consists of spun/melt-spun fine denier technology, followed by carded needlepunched and/or heat-bonded staple fiber capacity, spunbonded polyester and high-denier, spunbonded polypropylene needlepunched technology. Small but growing installations of other nonwoven technologies, including sizing carded air, are also present.

During 2020-2023, the capacity of spunbond and fine spunbond polypropylene nameplates among the five Southeast Asian countries will increase by 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 the end of 2020.

Fitesa/CNC commissioned a new Reicofil 5 line towards the end of 2020 with an annual nominal 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 nominal capacity of 15,000 tons. Together, Cobes Industries in Myanmar and Oceancash in Malaysia will commission fine denier spinning lines in 2022 representing 18,000 tons of new nominal capacity.

In 2020, nameplate capacity for fine and coarse denier spunbond/spunmelt polypropylene technology in Southeast Asia accounted for approximately 9% of all global capacity in this technology category.

In 2023, we estimate that the largest concentration of spunlaid polypropylene capacity among the five Southeast Asian countries will be in Thailand, where 48% or 162,000 tonnes 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 represent 33% of the total capacity of Asian Block 5. In Indonesia, there will be two producers who will have 52,000 tons of this capacity in operation, which is equivalent to 15% of the entire capacity of the region. The remaining capacity of this technology in the region is in the Philippines.

Many of the largest nonwovens producers in Southeast Asia only use fine polypropylene spunbond/spunmelt technology and largely supply the hygiene market. Fibertex Personal Care, which commissioned a new line in the third quarter of 2021 in Malaysia, was the largest producer of nonwovens in SEA at the end of 2021 with a capacity of 96,000 tons.

FitesaCNC in Thailand had a capacity of 72,000 tons of fine denier at the beginning of 2021 after commissioning a new line in the fourth quarter of 2020. Asahi (Thailand) commissioned a new line of fine spinning fusion denier with a nominal capacity of 15,000 tons in the third quarter of 2021, bringing its total capacity to 55,000 tons. Mitsui in Thailand has a nominal capacity of 30,000 tonnes.

Producers of fine denier spunbond/spunmelt in Southeast Asia will remain heavily dependent on exports to achieve acceptable levels of capacity utilization. The demand for disposable nonwovens is increasing but still quite low compared to the installed capacity in the region.

Unitika has a 30,000 ton spunbonded polyester line in operation in Thailand, making it the sixth largest nonwovens producer in Southeast Asia. Nonwovens in this range will be used in carpet backings, geotextiles, roofing, automotive and other industrial applications.

Ten Cate, which was acquired by Solmax Quebec Canada in the first quarter of 2021, is the only producer of large denier spunbonded polypropylene nonwovens in Southeast Asia. These nonwovens are needlepunched and supply the market for geotextiles and other related end uses. The nominal annual capacity of Solmax is 9000 tons and has been 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 announced the installation of new spunlaced and air through bonded lines in India, also announced that it will install new capacities in Vietnam. No timeline or technology has yet been announced. Nan Liu now manufactures air-through and spunlaced nonwovens in China.

David J. Price is the author of Price Hanna Consultants LLC’s annual subscription report on global capacities, supply/demand, manufacturing economics, and profitability of spunbonded and spunmelt nonwoven polypropylene. The most recent report was published in the third quarter of 2021 and covers the period 2015, 2020-2025. For a detailed prospectus for this study, please contact Michele Scannapieco, Price Hanna Consultants LLC, at [email protected]