Agricultural film booms, construction film holds its own.

* Two major markets for heavy-gauge polyethylene film are construction and agriculture. Construction film is used in buildings, homes, and roads to protect against moisture, wind, weather, chemicals, dust, debris, and mildew. Agricultural film is divided among mulch film (53% of the market), greenhouse film (24%), fumigation/sterilization film (5%), water and soil conservation film (3%), and crop storage or silo film (15%).

Construction film and agricultural film together consumed nearly 1.2 billion lb of resin in 2002 and are expected to surpass 1.4 billion lb by 2006 with a collective 5.4% average annual growth rate.

In 2002, Poly America of Grand Prairie, Texas, was the largest producer of these films and held a 33% market share. Tyco Plastics in Minneapolis, div. of Tyco International Ltd., was the second largest player with a 27% market share. Rounding out the top five producers were AT Plastics, Inc., Brampton, Ont.; Pliant Corp., Schaumburg, Ill.; and AEP Industries, Inc., South Hackensack, N.J. Collectively, these five firms comprised 79% of the market in 2002.

'Ag' film grows faster

Despite depressed profitability for processors, construction and agricultural film markets are both growing, but at very different rates. PE construction film is greatly affected by weather, economics, the housing market, and building and road construction. It is expected to increase 3.5% annually through 2006. Agricultural film is growing much faster, at 8.2%/yr, due to development of new agricultural technology and increased awareness by farmers of the value of these films.

Because it fluctuates with the housing industry, the construction film market is very cyclical. The nation's housing market should continue to provide solid support to the U.S. economy throughout the remainder of 2003 and beyond and will likely set a new record for sales of new single-family homes this year. The earlier part of 2003 was complicated by unusually large swings in weather conditions and uncertainties related to the conflict with Iraq. But the home construction market may be cushioned by the passage of President Bush's economic stimulus package, which could strengthen job and income growth this year, and the recent cut in the prime lending rates by the Federal Reserve Board. Record low interest rates helped boost new home purchases this year, though interest rates have crept up recently.

Advances in the use of plastics in agriculture have increased crop yields and quality while lowering the need for chemical fertilizers, pesticides, and herbicides. New higher-tech agricultural films in the works can add days or weeks to a growing season.

Inclement weather, such as torrential rains, may require farmers to buy more mulch film, since heavy rains cause the film to deteriorate more rapidly and require farmers to purchase the film more frequently. Prolonged drought in other parts of the U.S. can also increase demand for agricultural film that helps retain moisture in the soil. On the other hand, use of methyl bromide gas as a soft fumigant is being limited because of concerns over depletion of the ozone layer. This will likely cause declining use of fumigation/sterilization film until alternative methods are developed.

Blending resins

LDPE and LLDPE are often used alone in construction and agricultural films. But blending the two gives better puncture resistance and stiffness at thinner gauges than straight LDPE. These films are considered low-margin products and are often made from the least expensive materials. Consequently, wide-spec and reground or repelletized scrap are increasingly utilized, often in blends with virgin.

Mastio & Company, based in St. Joseph, Mo., is a consulting firm specializing in industrial-consumer opinion research and market trends in the plastics industry. For more information, call [phone] or visit www.mastio.com / pt / outlook.html.