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As the most cost-effective and highly flexible nonwoven technology, spunbond and spunmelt nonwovens occupy the largest share of the overall market, which is largely due to its important position in the sanitary products market. Despite the competition from technologies such as thermal bonding, spunlace and hot air, the spunbond and spunmelt market will continue to grow. According to the analysis and forecast of global spunbond/spunmelt polypropylene non-woven fabric production capacity from 2017 to 2022 released by Price Hanna Consulting, we can get a glimpse of this highly competitive market.

By the end of 2017, the global production capacity of spunbond/spunmelt polypropylene non-woven fabrics was slightly less than 4.4 million tons. According to the announced expansion plan, production capacity will increase to about 4.8 million tons by 2020, equivalent to an annual growth rate of 1.8 percent. Since not-yet-announced capacity expansion is not included in our forecast, and more production line investment is likely to follow, actual global capacity in 2022 may be slightly higher than current estimates.

At present, about 84% (344600 tons) of the new capacity added between 2017 and 2022 is expected to be in use by 2019. New capacity since 2012 has led to oversupply in some regional markets. New capacity is expected to slow down in the Americas, Middle East and Europe in 2017-2022, while Asia-Pacific, South Asia, China and Africa will grow at a higher rate. Between 2017 and 2022, South Asia (India/Other), Africa and Asia-Pacific are expected to see capacity growth above the global average, ranging from 3-8% per year. The average annual capacity growth rate in Greater Europe and North America is about 1.5 per cent, as these regions are oversupplied and need to absorb capacity. In South America, the market is oversupplied. due to lower-than-expected demand, some production lines have been idle and old production lines have been closed. In the Middle East, after a period of significant expansion, the market is oversupplied. This oversupply situation is further exacerbated by the increase in new capacity in North Africa and lower-than-expected demand growth. Compared with the previous period, China's capacity growth is expected to be moderate, with market penetration and capacity base increasing significantly over time.

During 2017-2022, the annual growth rate of global demand for spunbond/spunmelt polypropylene nonwovens is expected to be 4.7 percent (by weight) and 4.8 percent (by area). Given this demand forecast, global overcapacity will be partially absorbed, but capacity utilization will be uneven across regions of the world. The higher demand growth by area is associated with the use of lower grammage nonwovens in hygiene products, which results in a slightly lower demand by weight. We believe that the downward trend of nonwoven cloth weight has been basically in the end, and the product weight has stabilized or may tend to increase. Demand in emerging markets is expected to grow at a higher rate, where market penetration of disposable and durable nonwovens has not yet been fully realized. The regions with the highest market growth (by weight) in 2017-2022 are expected to be Africa, South Asia and China, and Asia Pacific. Greater Europe is expected to see some attractive growth, while demand in North America, South and Central America and the Middle East will remain moderate.

The largest market for spunmelt polypropylene nonwovens is disposable hygiene products (baby and adult diapers and feminine care), accounting for 2/3 of the total global fine denier and coarse denier polypropylene nonwovens. Other important markets for nonwovens made from spunmelt polypropylene technology include various construction applications (geotextiles, wall and floor coverings), home decoration (furniture construction fabrics and carpet backing), medical and industrial protective clothing, and automobiles.

Demand for spunbond and spunmelt nonwovens for hygiene products will drive growth. The main drivers of demand for disposable hygiene nonwovens are the birth rate and aging, market penetration and per capita income. These factors play a key role in the projected growth in demand for disposable nonwovens in India, Africa and China.

In India and Africa, the market penetration of disposable nonwovens products in hygiene is still low, but it is improving rapidly. As the market penetration rate in China's cities is now high, but the demand growth in rural areas is still low, the year-on-year growth of demand in China has dropped from the previous high. Overall, the growth in hygiene demand in the Asia-Pacific region remains attractive, as market penetration of disposable hygiene products remains low in some developing countries in the region.

We expect production line capacity utilization to increase between 2020 and 2022. In some regions, this will drive the addition of new capacity to meet demand. In some regions where supply exceeds demand, demand will be concentrated in certain producers, and the capacity utilization rate of these producers will be higher than the regional average.

The modernization of the spunmelt polypropylene technology platform is at a healthy and transformative pace. Manufacturers install new production lines to meet the growing market demand and respond to market challenges and changing needs. Producers are also working to improve the bulk and softness of spunmelt nonwovens. These advances fully reflect the vitality of this leading nonwoven manufacturing technology field.

New technology, new production line

Judging from historical data, spun-melt polypropylene production capacity has maintained growth to keep pace with demand growth. However, in the past few years, other factors have emerged to drive the installation of new production lines. The demand for lower grammage spunmelt nonwovens, which cannot be cost-effectively achieved by the older generation of technology, has driven the installation of new production lines. Recently, the demand for soft non-woven fabrics has led to an increase in bicomponent production capacity, which is one of the methods in the spunbond process that can be used to produce softer non-woven fabrics.

Secondly, the latest generation of spunmelt technology can provide higher output, faster production line speed, finer fiber denier, higher energy efficiency, digital (intelligent) process monitoring, high loft and softer materials. This technology has a high production line input cost, but once fully utilized, it can produce a lower cost product. The versatility and advantages of the new generation technology will motivate some producers to adopt the latest technology, even before demand is sufficient to absorb new capacity.

Third, manufacturers seek to position themselves in growth markets and deploy globally to maintain market share. In the past few years, the competitive advantages of strategic and emerging markets have been obvious. We see many new producers entering North America, China, South and Central America, Egypt/Africa, Russia, Indonesia and India. Recently, strategic positioning in the global region has led to the installation of production lines closer to the target market in order to minimize transportation costs.

Finally, while there is some consolidation among producers, equipment rationalization is far from enough. Early equipment continues to operate. We expect that the latest production capacity will be used first, because the products produced by this technology will have the best product performance, and once the production line is fully utilized, the lowest manufacturing cost will be obtained. A new generation of production lines could replace the older ones now in operation, potentially leading to the retirement of very early technologies.

We estimate that 24% of all fine-denier spunbond capacity still in operation in 2017 is old technology. In addition to the manufacturer's handling of the installation of new production lines and the rationalization of old production lines, the new spunbond polypropylene production line will have other effects.

One impact is the increasing investment cost of new spunmelt polypropylene technologies, which may prompt some producers to consolidate to reduce the burden of high investment costs. This problem has driven the introduction of smaller production lines that can combine lower costs with advanced spinning technology.

The second related impact is the challenge of technological obsolescence, which requires continued reinvestment to remain competitive. The rapid development of technological modernization makes manufacturers worry about falling behind in the modern competition and have to choose between modernization, repositioning and even withdrawing from the market.

Another problem is the change in import and export volumes, as new producers in areas that previously needed imports are looking for opportunities to become exporters.

We have witnessed producers continue to invest in new technologies to stay ahead of the curve and build new plants in developing markets for higher growth. Mergers between large producers are frequent and likely to continue. Mergers between small producers may also occur.

Currently, only Gulsan and Berry Global have purchased the latest full-size version of the Reifenhauser 5 technology. PF Nonwovens(CZ Republic) will start production of a Reicofil 5 compact semi-commercial production line by the end of 2019. Berry Global (China) and Gulsan (Turkey) will start production of Reicofil 5 in the fourth quarter of 2019.

While orders for Reicofil 5 and other advanced technologies may seem trivial so far, it should be considered that the technology is up-to-date and requires very expensive inputs, before which a record number of new production lines have been installed. The new capacity previously announced to be completed by 2020 (Reicofil 4 S technology), which was ordered before the launch of Reicofil 5, will also continue to be installed. Such production lines include Toray's production lines in China and India, whose production capacity will be fully realized in 2020 and 2021, Gulsan's production lines in North Africa and Mitsui's production lines in Japan will be fully operational in 2019.