Following the rise of Covid-19, the global nonwoven business now faces the challenge of managing the pandemic’s decline. Hopefully gone are the discussions on face masks, quarantines, lockdowns, hospitalizations, respirators, gowns, testing, travel restrictions, vaccines and, unfortunately, deaths from this disease.

The impact of Covid on the global spunlaid polypropylene nonwoven market in 2020 was dramatic. Normalization of demand has begun particularly among those product groups that experienced surge demand during the pandemic highs. We estimate that the demand spike for masks, gowns and wipes peaked in mid-year 2021 or about 18 months from January 2020. Since then, demand for nonwovens in these product categories has softened and even more so as 2023 begins. In the medical market, significant inventories of nonwoven roll goods and converted medical products have increased since Q3 2022 in some global regions. This inventory increase has occurred as demand has weakened and previously ordered materials were finally delivered from ships in ports. Destocking has begun for these medical PPE products which we believe will last through much of 2023.

Moreover, businesses around the globe face challenges and uncertainties resulting from the Russia/Ukraine war as well as persistent inflation and other latent threats to the global economic system.

The global spunbonded/spunmelt polypropylene nonwoven 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 nonwoven 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

During 2022, we estimate that about 239,500 tons of new fine denier capacity were commissioned composed primarily of a blend of Reicofil 5, Fare’ and Chinese technology. These new installations brought total global capacity to 5,351.2 kt. This capacity, largely ordered during the height of the pandemic, was met with declining demand as Covid infections continued to weaken throughout the year. By the end of 2022, capacity utilization had fallen from its peak at mid-year 2022. We estimate that another 191,000 tons of new, fine denier capacity will be commissioned in 2023 bringing capacity to about 5,542.2 kt.

In 2024, we estimate another 110,000 tons of new capacity will be commissioned. This will bring total fine denier global capacity to about 5,642.2 kt. In total, we judge that about 541,000 tons of fine denier spunlaid capacity will be commissioned during the period 2022 – 2024. This would represent an increase in capacity of just over 10% over that present in 2021 or 2.7% CAGR from 2021 – 2024.

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 tons from 2022-2027 to be around 5%. 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 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 downside in 2023 and upside in 2024.

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

During 2022 – 2024, 131,500 tons of new capacity are now expected to enter the market. This capacity increase is driven largely from five new Reicofil 5 installations during the period including that of a line ordered by Avgol which was to have been installed in Russia but was relocated to the U.S. after Russia invaded Ukraine. This additional boost to North America capacity will bring pressure on capacity utilization during the period. Even more capacity could be added pending enaction of funding to install capacity to address potential future pandemic demand for medical apparel should it occur.

Capacity utilization 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. Demand continued to weaken moderately throughout 2022 and more sharply in Q4 as inventories rose in medical related products due to reductions in demand and deliveries of previously ordered goods. Destocking of nonwoven based medical products will continue for much of 2023. 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 grow at a ~4% annual rate, lower than in previous periods as market penetration is higher. We expect healthcare demand to fall significantly in 2023 as inventories are reduced and demand normalizes to pre-pandemic levels. Demand in construction and technical specialty markets may be attractive but could face downward economic pressure. We think capacity utilization will weaken during the period as new capacity enters as rationalization of formerly decommissioned capacity occurs. We expect year-end 2024 nameplate capacity to total 896.9 kt.

South & Central America Capacity & Demand

In South America, capacity utilization was slightly lower in 2022 than in 2021 as Covid related PPE demand moderated and Fitesa Brazil realized the full capacity of a Reicofil 5 (R5) machine commissioned in the 2H of 2021 in 2022. While no other large-scale capacity line installations occurred or have been announced, several low to moderate capacity Chinese made lines have been commissioned in the region. Selected producer capacity is aging. Demand for disposable hygiene and other nonwoven markets is low to moderate. Adult incontinence market demand growth continues to be higher than other hygiene product categories as market penetration grows. We expect additional capacity to be added before 2026 to serve growing demand and modernize the existing technology base. We expect year-end 2024 nameplate capacity to total 354.0 kt.

Greater Europe including Turkey & Russia Capacity & Demand

In Greater Europe, capacity increased by 35.5 kt in 2022 with the realization of the full capacity of new lines commissioned by Union (Italy), and Innovatec (Germany) along with the commissioning of new capacity by Master Plast (Hungary) and Gulsan (Turkey). Capacity will increase by 30.0 kt in 2023 with the commissioning of a line by Fitesa and the full realization of capacity of the new line commissioned by Gulsan in 2022. Capacity will increase again in 2024 by 10.0 kt from the full realization of the capacity commissioned by Fitesa in 2022. Capacity utilization in Greater Europe is uneven among producers and dependent upon exports. Capacity utilization was moderate during much of 2021 due to the pandemic surge and weakened in the last months of the year. Demand weakened further during 2022 to more normalized pre-pandemic levels. Medical market demand will decline in 2023 as destocking occurs. Capacity utilization will remain low in Greater Europe in 2023-2024 as capacity outpaces demand growth in both regional and export markets. We expect year-end 2023 nameplate capacity to total 1,160.6 kt. and 1.170.6 in 2024.

Middle East & Africa Capacity & Demand

In the Middle East and Africa, the pandemic-related demand surge provided much needed higher capacity utilization in the region in 2020 through the first half of 2021. Without Covid related demand, high levels of capacity utilization in the Middle East is dependent upon exports to Europe and Southern Asia. Based upon our assessment of demand and imports/exports, capacity utilization for producers in the Middle East & Africa is expected to remain attractive in 2023 – 2024 but pressured from new capacity installations by Gulsan (Egypt) and PFNonwovens (South Africa) during the period. We do not include Iran in our analysis of the Middle East 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. Technology in the GCC is aging. SGN (Saudi Arabia) has announced its intention to install an R5 machine in Saudi Arabia in 2024/2025.

In North Africa, Gulsan (Egypt) will commission a Reicofil 5 line with a nameplate capacity of 25,000 tons in Q1 2023. This installation brings the number of lines operated by Gulsan in Egypt to three. PFNonwovens will add 15,000 tons of capacity with a R5 installation in 2023 in South Africa. We expect year-end 2024 nameplate capacity in the Middle East to total 192.0 kt. In all of Africa, we expect capacity to be 197.0 kt in 2024.

Southern Asia Capacity & Demand

In Southern Asia, demand continues to grow as the market penetration of disposable nonwovens continues to increase. With that, capacity has surged. Since 2021, capacity installations by Toray, Global Nonwovens, Manjushree Spntek and other producers have added 102.5 kt of new capacity in India, a 52% increase over 2021. Toray commissioned a new Reicofil 4s line with an annual nameplate capacity of 20,000 tons in its new plant in India in Q4 2020. Global Nonwovens commissioned an R5 line with a capacity of 30.0 kt in mid-year 2022 in its plant in India. This is Global’s third line. Global was the first company in India to install high capacity spunmelt capacity in the region beginning in 2015. Avgol commissioned an upgraded Reicofil 3.1 line moved from Israel to a second new plant in India in the second half of 2022. Manjushree commissioned a new R5 line in India. This line has a capacity of 15,000 tons and is intended to serve healthcare and hygiene markets. We suspect there will be more capacity installed in India before 2026 as demand growth continues. 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 2024 nameplate capacity to total 271.5 kt.

Asia-Pacific Capacity & Demand

In 2023, the largest producers in the region are Mitsui/Asahi (Japan, Thailand – 148.0 kt), Toray (South Korea, Indonesia – 103.0 kt), Fibertex (Malaysia – 96 kt) and Fitesa/CNC (Thailand – 69.0 kt). Mitsui and Asahi will merge in October 2023 creating the fourth largest spunlaid PP nonwoven production company in the world. Asahi commissioned a line with a capacity of 15,000 tons in Q3 2021 whose full capacity was realized in 2022. Fibertex (Malaysia) commissioned a R5 line in Q1 2022 which has a nameplate capacity of 15,000 tons. This line’s capacity was fully realized in 2023. New lines were commissioned by Cobes Industries in Myanmar in Q3 2022 and Hanil (South Korea). Hygiene demand in the region is growing attractively, particularly when excluding Japan whose market is fully penetrated. Capacity growth has mirrored demand growth. We expect year-end 2024 nameplate capacity to total 512.0 kt.

China Capacity & Demand

In China, we estimate that 41,500 tons of new PP SB/SMS capacity will be commissioned in 2023. This follows the commissioning of 89.0 kt in 2022 and 67.5 kt in 2021. Included in this estimate are new capacity installations by Allmed, Jofo Wuxi, Berry, Cobes and Guan Hong 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 chatter. While we expect more capacity will be installed in China during 2024 – 2026, we estimate annual demand growth for Chinese-made spunlaid polypropylene nonwovens to soften. An increase in capacity together with a decrease in demand will impact future capacity utilization. We estimate year-end 2024 nameplate capacity to total 2,003.7 kt. China is significantly oversupplied and dependent upon exports for reasonable capacity utilization.


Spunmelt Manufacturers Update
Avgol Nonwovens
In December, Avgol said it would add a state-of-the-art, high speed Reicofil 5 line at its Mocksville, NC, facility. It will be the company’s sixth line at the site, which was first acquired in 2001. “The addition of this new line enables us to have even greater production capacity, delivering component materials that are ‘Made in America’ and offering more sustainable options for the growing North America market and around the world,” says Avgol CEO Tommi Bjornman. “This additional new line also enables the Mocksville facility to deliver additional meltblown nonwovens, ensuring we have extra capacity to meet market demand.”

The investment will deliver biocomponent and corresponding high-loft capabilities, with the line producing materials for applications that meet the needs of upper tier products for hygiene customers.

Avgol’s most recent U.S. investment took place in 2015 when it added its fifth spunmelt line in North Carolina. The company also has operations in Russia, China, Israel and India.

In other news, Avgol has formed a partnership with YanJan USA LLC, to deliver apertured spunbond products made by YanJan to the North American market.

Berry Global
With manufacturing centers across the globe, Berry Global continues to invest in its Health, Hygiene, and Specialties business to build on and maintain its world-class, low-cost manufacturing base with an emphasis on key growth markets and regions where it continues to see incremental opportunities to invest organically in support of its unwavering commitment to global growth.

The company has added a new spunmelt nonwovens line for hygiene and medical applications in China—not long after completing work on its first Reicofil 5 line at the site. China continues to be considered a growth market for Berry. Elsewhere, Berry added to its spunmelt output in the U.S. in 2020-2021.

Fibertex Personal Care
Fibertex Personal Care, Aalborg, Denmark, has recently invested $40 million to add new lines at its sites in Malaysia and the U.S. The Malaysian site was expanded with the addition of a specialty nonwovens line while a printing line was added to the U.S. site in Asheboro, NC. Fibertex Personal Care now operates six lines at two sites in Malaysia, which make about 125,000 tons of capacity, as well as three lines in Denmark.

In addition to expansion, Fibertex Personal Care continues to focus on sustainability. In late 2020, the company announced a partnership with Sabic, a global leader in the chemicals industry, to create a range of nonwovens using high-purity recycled plastics from Sabic’s Trucircle portfolio and services. They have developed the first reported nonwovens range based on recycled plastics in the hygiene industry. The initiative is seen by the two partners as an exciting step towards a more sustainable supply chain and greater recyclability for nonwovens. The new material can be used as a drop-in solution while meeting the brand owner’s requirements for purity and consumer safety for the hygiene industry applications.

Fitesa
This year, Fitesa will start production on two high-capacity, state-of-the-art Reicofil 5 lines—one in Simpsonville, SC, and another at an unnamed location in Europe. Both investments are part of Fitesa’s strategy of increasing capacity for softer and more sustainable materials for the global hygiene market. They both will be equipped to produce full high loft and standard spunmelt products, using a variety of biobased and circular raw materials, primarily for hygiene and medical applications.

In addition to these two lines, Fitesa is wrapping up a comprehensive expansion program, announced in November 2020, adding 55,000 tons to its global output. Included in this investment is a multibeam Reicofil line, which began production last year in Cosmopolis, Brazil. Another component of this plan focuses on modernization whereby Fitesa is increasing production volumes, modernizing assets and enhancing the flexibility of the current asset base. These efforts have added another 20,000 metric tons of spunmelt capacity which is split evenly between the U.S. and Europe.

Gulsan
Investment continues for Turkey’s Gulsan Group. In October 2021, not long after finalizing construction on a Reicofil 5 line at its Corlu, Turkey, site, the company announced it would add a second Reicofil 5 line in Turkey, with start up scheduled for June 2022, as well as a second line at its site near Cairo, Egypt, later in 2022. Both lines were scheduled to come onstream last year.

Gulsan has not released capacity details for the new lines but reports the investments will support its future growth in the industry and reinforce its position as one of the leading manufacturers of spunmelt materials to supply top quality, ultra-light weight, diversified nonwovens with highly sophisticated and state-of-art technologies to its business partners for baby diapers as well as medical and health products in the EMEA (Europe, Middle East and Africa) region.

Mitsui Chemicals/Asahi Kasei
Mitsui Chemicals and Asahi Kasei, two leaders in the Japanese nonwovens industry, will combine their nonwovens businesses later this year. Under the proposed plan, all of Mitsui Chemicals’ nonwovens businesses with the exception of its SWP fibrillated polyolefin fiber will be integrated with Asahi Kasei’s spunbond and cartridge filter business. The company will be known as Mitsui Chemicals Asahi Life Materials Co. and it will be based in Tokyo, Japan. Mitsui will own slightly more than 60% of the company.

The Japanese sites for the company will include Mitsui’s Sunrex subsidiary in Mie, Japan, as well as its Nogoya Works plant in Aichi. Meanwhile, Asahi Kasei’s plant in Moriyama will provide outsourced production. Overseas sites include both companies’ Thailand operations, which will continue to carry out production and sales as subsidiaries of the integrated company. Asahi Kasei’s spunbond operation in Moriyama will be merged into the company by way of an absorption-type merger at a later date.

PFNonwovens
PFNonwovens’ latest line, a Reicofil 5 line, started up in summer 2022 in Pennsylvania. Additionally, a new line came onstream around the same time in Cape Town, South Africa. These new lines increased the company’s global capacity by 10%.

From a technological standpoint, PFNonwovens, which also has sites in Czech Republic and Egypt, has commercialized one of the softest materials in the market, if not the softest material. The company also has high performing 100% bio-based fabrics that will help it move the frontier of sustainability and that are fully commercial on the R5 platform. “We have been investing globally in the most recent years to increase our production capacity and capability with the most recent technology in all our sites,” says CEO Cedric Bailey. “This includes one RF5 in each continent we operate in. It serves our objective to remain at the forefront of best performing and most competitive material developments.” 

Saudi German Nonwovens
Saudi German Company for Nonwoven Products (SGN) is investing in a new Reicofil 5 spunmelt production line focused on sustainable and premium products at its facility in Saudi Arabia.

“Through investment in the new R5 Spunmelt line, SGN will deliver additional capacity to meet market demand for sustainable and premium products globally. Presently, SGN has a significant presence in the baby diaper, adult incontinence and feminine hygiene markets and holds long-standing partnerships with multinational brands in North America, Europe and regionally. In addition, our organization operates multiple distribution centers in Europe and North America that localize the supply point of these new materials, delivering agility and ‘local’ supply,” says Haitham Al Hudhaif, president of SGN.

The new Reicofil 5 (RF5) line will add capacity and capability to the company’s current manufacturing capabilities, which include four Reicofil lines. The investment will deliver biocomponent and corresponding high loft capabilities, complementing SGN’s current premium product range, already well received by customers seeking material for higher tier categories.

Toray
Toray makes 231,000 tons of nonwovens in Asia. The largest percentage of output is currently made in China where the company has two sites in Nantong and Foshan, which together make 93,000 tons of nonwovens per year. The company’s most recent Chinese investment, in Foshan, has been completed, adding 20,000 tons of capacity.

This investment represents Toray’s latest expansion in China, where demand for the materials is still growing due to growth in the hygiene market. Also in 2020, Toray started production on a site in India, capable of making 18,000 tons of material per year.

One of the largest makers of nonwovens in Asia, Toray also makes 61,000 tons of the material in Korea, 37,000 tons per year in Indonesia, and 10,000 tons of nonwovens in Japan.
Union Industries

New investments at Union Industries include a Reicofil 5 spunmelt line in Italy. The line, which came onstream in late 2021, is allowing the company, in addition to the existing assets, to continue to make both specialty and commodity materials for the hygiene market. Union has operations in Italy and Poland.



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 2022 covering the period 2016, 2021 – 2026. To obtain a detailed prospectus for this study, please contact Michele Scannapieco, Price Hanna Consultants LLC, at [email protected] or visit our website www.pricehanna.com.