08 March 2011 15:37 [Source: ICIS news]
By John Richardson
His comments reflect the increasingly complex world in which we live. Interactions between environmental pressures, shifts in government policy and changes in consumer behaviour are just some of the factors that can rapidly result in an opportunity becoming yesterday’s news.
A product might very simply also get too expensive, resulting in demand destruction.
A classic case in point about how opportunities can suddenly vanish is the ban by
This sector accounts for about 50,000 tonnes/year of PE demand in
The moral case for pushing sales of gutkha, a chewing tobacco, is pretty dubious to say the least.
“Apart from the obvious health risks, what is really sad is that very low-paid workers chew this stuff in order to suppress their appetites. It is cheaper than food,” added the business development manager.
So the idea behind banning plastic packaging is to reduce the nationwide scale of the industry, making supply more local and therefore harder to access, he said. PE is used to preserve the shelf-life of the tobacco, increasing availability across the country.
One might think that this is an opportunity well worth losing for the wider good.
The danger now, though, is that the tobacco test case could be used by local non-governmental organisations (NGOs) to attack more defensible areas of
“Today it is gutkha. But there are hundreds of products packed in pouches. Tomorrow an NGO can give reference to this case and say shampoos should not be packed in pouches,” said an India-based industry source.
Pouches or sachets have grown to overtake other forms of packaging in many product segments.
Market research firm AC Nielsen estimates that sachets accounted for 74.5% of the 104,000-kilolitre Indian shampoo market in 2008, up from 71% in 2006 and 73% in 2007.
“True, there is a big waste issue. But these sachets cost just a few cents each and with incomes still very low for most Indians, this pushes a little luxury into hundreds of millions of lives,” said a second India-based industry source.
“For the women factory workers who cannot even afford a whole bottle of shampoo, the odd sachet at the weekend with a picture of a Bollywood star on the sleeve makes them feel a little bit like that Bollywood star for a few seconds.”
If this is tugging at your heart strings, also think about the economic potential: giving India’s vast army of low earners a taste of being middle class raises aspirations, encouraging consumption growth for all manner of products made from chemicals and polymers.
This is a good example of how rising public awareness about chemicals and polymers in general makes engagement with governments and NGOs ever-more important.
At a much more prosaic level, a product can quickly become too expensive before an investment opportunity can be pursued.
Low density PE (LDPE) is a case in point, where demand in the Indian market fell by 6% last year due its high cost, according to a local industry estimate.
The cost has soared because of lack of investment in LDPE capacity, once seen as a sunset product because of the development of linear low density PE (LLDPE) – a substitute for film applications.
LDPE has remained popular because it can be very easily processed on what is often very far from state-of-the-art machinery in
Boosting extrusion- or coatings-grade LDPE consumption has been seen in the growth in the plastic pouches we have just been talking about.
Pouches for food and non-food items are often made from multi-layer structures, including LDPE, LLDPE, metallocene LLDPE and metallised polyethylene terephthalate (PET) film.
Despite this strong source of demand, many LDPE producers have switched their plants to ethylene vinyl acetate (EVA) production, where margins have been better. A booming end-use sector for EVA is to make encapsulants for solar panels.
“Another problem is that you can only make extrusion- or coatings-grade LDPE via the autoclave process,” the business development manager added.
“The autoclave process is expensive in energy costs and is difficult to operate. Nobody, as a result, has invested in autoclave capacity for many years.”
This might logically lead to full-scale and costly research into new production processes for LDPE extrusion grade – or into other polymers that can do the same job.
But the danger is that an overall ban on plastic pouches in
Such uncertainties could make incremental changes in technologies and product mixes, rather than any major research and development initiatives, the way forward.
In this ever-more complex and changing world, you would then run the risk of losing the biggest opportunities of all.
With additional reporting by Malini Hariharan
Read John Richardson and Malini Hariharan's Asian Chemical Connections blog
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