KEY FACTORS DRIVING AIRLAID DEMAND,
SUPPLY AND PROFITABILITY
By Pricie Hanna
NTC 2002
John R. Starr, Inc.
Resources for Decisions
Nonwovens, Hygiene Absorbent Products
& Key Raw Materials
John R. Starr, Inc.
u
Management consulting firm
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Specialists in nonwoven products, hygiene
absorbent products and related industries
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Confidential client engagements
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Multi
-client market and technology
Multi-client
publications
Global Overview of Airlaid Nonwovens
By Process and Application
2001 Demand for All Applications
By Bonding Process
By Product Application
Wipes
Latex Bonded
Thermal &
Multi Bonded
Hydroentangled
Airlaced
Hydrogen
Bonded
K-C
Coform
Other
Hygiene Cores
& Sublayers
Other:
Tabletop
Medical
Food Packaging
OUTLOOK FOR WIPES MARKETS
Global Outlook for Nonwoven Consumption
in Wipes
10
4.4% per year growth
1.5 billion m2 incremental demand
7.7
8
6.2
Billions
of
Square
Meters
6
4
2
0
2001
2006
Spunlaced is emerging as the leading technology competing
with airlaid for wipes applications.
Technology Life Cycle for Nonwoven
Wipes
Sales
Spunlaced
Carded
thermal
bonded
Airlaid
Airlaced
Laminates
Needlepunched
Introduction
Advanced
technologies
Growth
Time
Mature
Carded chemical
bonded
Decline
Nonwoven Technology Competition in
Global Wipes Market
Product
Specialization
Spunlaced
Airlaid
Carded
Other
Scale
Ovals represent approximations of volume present in wipes market
Performance of Nonwoven
Wipes Market – Price Versus
Performance of Nonwovens
Spunlaced
All-Staple
Airlaced &
Spunlaced
Pulp/Staple
Composites
Caustic
Entangled
Specialty
Carded
Cheese
Cloth
Airlaid
Carded
Wet
Laid
Apertured
Film laminates
Spunbonded
Price/Yd2
Performance of Nonwoven
Wipes Market – Price Versus Performance
of Nonwovens in Selected Markets
Clean
Room
Dry
Floor
Sweepers
Baby
Wipes
General
Purpose
Wipes
Personal
Care
Wipes
Household
Cleaner
Cloths
Food
Service
Wipes
Price/Yd2
Surface
Prep
Printing
Wipes
Embalming
Wipes
Global Outlook for Nonwoven
Consumption in Wipes
Spunlaced and Airlaid – 2001
Billions
of
Square
Meters
Spunlaced
Airlaid
Global
U.S. & Canada
North American Airlaid Market
Environment
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Significant new airlaid capacity recently
installed (with latex, thermal and hydrogen
bonding capabilities) for advanced airlaid
composite, flushable moist tissue and
traditional applications.
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New lines have excellent economics of scale
when fully utilized.
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Currently, supply exceeds demand.
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No airlaced (hydroentangled airlaid) lines
are in this region yet.
North American Spunlaced Market
Environment
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Significant new capacity has been
announced to the industry.
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Continued import of low cost spunlaced
substrate from Europe and Middle East will
be needed to satisfy ongoing demand.
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North American nonwovens producers and
their major customers have not embraced
airlaced concept for wipes.
U.S. and Canada Market Dynamics
Baby Wipes
High
Performance
Attributes
Key Drivers
Airlaced
Spunlaced
Airlaid
• Major consumer products
competitor switching
substrate technology
• Excess European spunlaced
and airlaced capacity
entering market
Low
Low
High
Relative Cost
U.S. and Canada Market Dynamics
Home Care Wipes
High
Performance
Attributes
Key Drivers
Airlaced
Airlaid
Carded
Spunlaced
Low
Low
High
Relative Cost
• Increased price competition
at end product level as
category matures
• New market entrants drive
demand for substrate
differentiation
U.S. and Canada Market Dynamics
Personal Care Wipes
High
Performance
Attributes
Key Drivers
Airlaced
Spunlaced
• Spunlaced is the traditionally
preferred substrate for
personal care wipes
• New spunlaced/airlaced
innovation occurring to
reduce costs and increase
differentiation
Low
Low
High
Relative Cost
Airlaid Will Remain a Major Technology in
the Global Wipes Markets
but growth could be impacted by
• a possible shift to spunlaced in the large North American baby wipes market, and
• a shift to carded in the household wipes market
Airlaid Versus Spunlaced in Global Wipes Market
Airlaid could grow faster if the baby wipes shift does not occur
Billions
of
Square
Meters
Latex/Thermal
Bonded Airlaid
2001
2006
Spunlaced/Airlaced
2001
2006
Sources of Nonwoven Demand Growth
For Global Wipes Markets
2001 – 2006
By Technology
Millions
of
Square
Meters
Spunlaced
Including Airlaced
Latex & Thermal
Bonded Airlaid
Carded
Other
Additional Capacity Will Be Needed to Meet
Future Spunlaced/Airlaced Demand
WORLD SUPPLY AND DEMAND OUTLOOK
SPUNLACED NONWOVENS
2001 - 2006 (1)
ine
Trend L
y
t
i
c
a
p
rm Ca
Long Te
Thousands
of
Tonnes
Demand
2001
2002
2003
2004
2005
91% of Nameplate Capacity
(1)
Capacity announcements to date only through 2003/2004. No additions assumed after that time in this figure.
2006
Wipes Will Account for Much of the Demand
Growth for Spunlaced/Airlaced Nonwovens
SOURCES OF GLOBAL DEMAND GROWTH
SPUNLACED NONWOVENS BY END USE
2001 - 2006
Thousands
of
Tonnes
Wet Wipes
Medical Applications
Dry Wipes
Other
Commercial Progress Will be Driven by a
Number of Well Resourced Companies
Consumer wipes:
Procter & Gamble, Kimberly-Clark
(baby and adult hygiene)
Procter & Gamble, Reckitt Benckiser,
Kao, Beiersdorf, Clorox, Unilever, SC
Johnson, Kimberly-Clark, Henkel
(personal care and household)
Industrial wipes:
Kimberly-Clark, Georgia-Pacific,
SCA Hygiene, PGI, DuPont, others
Nonwovens:
DuPont, PGI, Buckeye, GeorgiaPacific, Suominen, others
North American Examples
of New Airlaid Wipes
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P&G’s Swiffer Wet and Swiffer Wet Jet
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Clorox’s ReadyMop
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SC Johnson’s Pledge Grab
-It Wet Floor
Grab-It
Wipes
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K
-C Splash ‘n Go hand and face wipes
K-C
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Playtex’s Personal Cleansing Cloths
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K
-C’s Cottonelle Fresh Roll Wipes
K-C’s
Recent John R. Starr, Inc. Reports on
Wipes Markets and
Nonwoven Technology Competition
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World Outlook for Nonwoven Wipes
2001 – 2006
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World Demand and Supply Outlook for
Spunlaced Nonwovens 2001 – 2006
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Personal Care Nonwovens Products – North
America
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The Evolving Markets for Nonwoven Home
Care Products
OUTLOOK FOR HYGIENE CORE AND
SUBLAYER APPLICATIONS
Airlaid Cores and Sublayers
in Feminine Pads
u
Ultra thin sanitary napkins with airlaid cores
are slowly and steadily penetrating in all
global markets.
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In developing markets, higher cost of ultra
thins and women’s uncertainty about
performance are barriers.
u Leading
brands have upgraded airlaid
core and sublayer components.
Trends in Airlaid Cores and Sublayers
for Ultra Thin Feminine Pads
Old Designs
Most Recent Designs
P&G
Latex
LatexBonded
BondedAirlaid
Airlaid
Multi-Bonded
Multi-Bonded
Airlaid
Airlaid
K-C
Coform
Coform
Thermal
ThermalBonded
Bonded
Airlaid
Airlaid
Multi-Bonded
Multi-Bonded
Airlaid
AirlaidSublayer
Sublayer
Multi-Bonded
Multi-Bonded
Airlaid
AirlaidSublayer
Sublayer
Peat
PeatMoss
MossCore
Core
Hydrogen
HydrogenBonded
Bonded
Airlaid
Core
Airlaid Core
J&J
Trends in Airlaid Cores and Sublayers
for Ultra Thin Feminine Pads
Old Designs
SCA
Hartmann
Private
Label
Latex
LatexBonded
Bonded
Airlaid
Sublayer
Airlaid Sublayer
Hydrogen
HydrogenBonded
Bonded
Airlaid
Core
Airlaid Core
Conventional
Conventional
Fluff
FluffPulp
Pulp
Conventional
Conventional
Fluff
FluffPulp
Pulp
&
Latex
LatexBonded
Bonded
Airlaid
Airlaid
Most Recent Designs
Multi-Bonded
Multi-Bonded
Airlaid
AirlaidSublayer
Sublayer
Hydrogen
HydrogenBonded
Bonded
Airlaid
Core
Airlaid Core
Carded
CardedTAB
TAB
Sublayer
Sublayer
Hydrogen
HydrogenBonded
Bonded
Core
Core
Latex
LatexBonded
Bonded
Airlaid
Airlaid
&
Multi-Bonded
Multi-Bonded
Airlaid
Airlaid
Airlaid Composite Cores
in Adult Incontinence Products and Diapers
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Within three to five years, significant
penetration expected for light to moderate
urinary incontinence pads.
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Specialty diapers, such as swim diapers, use
airlaid cores.
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Product development work continues on cost
effective applications for airlaid cores in
diapers and training pants. Converting
efficiency and cost barriers currently prevent
use in high volume diapers/training pants.
OUTLOOK FOR AIRLAID SUPPLY/DEMAND
BALANCE AND PROFITABILITY
Substantial New Airlaid Capacity
Installed in 2001 in North America
u
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In North America, 5 new lines with capacity in excess of
100,000 tonnes were installed last year.
Ø None of these lines are expected to be fully utilized
in 2002 with incremental new volume.
Ø Buckeye and Concert have shifted production from
older lines to new lines causing significant unused
capacity on older lines.
Ø Demand for new airlaid composites and moist toilet
tissue is growing at slower pace than expected.
New Airlaced Capacity Available in Europe
and Middle East Region
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New airlaced (hydroentangled airlaid)
nonwovens are becoming available to compete
with all
-staple spunlaced wipe applications.
all-staple
u
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Cost competitive exports to North America are
expected.
Asia – New Capacity Driving Growth in Both
Conventional and Composite Applications
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Large scale capacity installed by BBA in China
last year is filling up initially more on
conventional applications than higher value
composites.
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A new Dan
-Web airlaid line is planned for
Dan-Web
China.
u
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One or two other new lines expected in this
region.
Profitability Outlook
u
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Near term, airlaid producers’ profitability will
continue to be depressed until the large
capacities of the recently installed lines are
filled.
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Longer term, the companies that have invested
in large capacity lines with significant
economies of scale will achieve attractive
profitability levels on those lines.
Profitability Outlook
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Profitability prospects for older, smaller
capacity lines are dependent on successful
development of specialty niche applications
which command higher sales values.
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Competition from spunlaced all
-staple fabrics
all-staple
and airlaced substrates in the wipes markets
will reduce the growth prospects and
profitability of latex bonded airlaid producers.