Blow molded industrial packaging is back on a growth track.

* Mastio and Company's most recent blow molding market study reveals modest but improved growth for blow molded industrial packaging. Since the economy took a downturn during late 2001 and early 2002, blow molded industrial packaging has made a comeback. Processors predict an average annual growth rate (AAGR) of 3.8%, for this market over the next three years.

At approximately 2.56 billion lb, blow molded industrial packaging represented 23% of total blow molded resin consumption in 2004 and is expected to reach 2.87 billion lb in 2007. The larger but slower growing sectors are household and industrial chemical (HIC) containers (44% market share); drums, intermediate bulk containers (IBCs), and tight-head pails (21% of the market); and motor-oil containers (12%). Other industrial blow molded container markets are smaller but healthier in growth. They include containers for automotive and marine fluids, agricultural chemicals, gasoline, and paint and related products.

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Nearly 85% of the resin used in these sectors is HDPE. PET has appeared in bottles for motor oil and other automotive and marine fluids, though it is used more frequently in HIC containers such as for dishwashing liquids. Despite its high clarity and shelf appeal, PET's growth in these markets is lagging due to higher cost and lower chemical resistance than HDPE.

PVC resin consumption in these markets represented 200 million lb in 2004 and is expected to have a 3.5% AAGR over the next three years. Although PVC is decreasing in popularity in many markets, it is still preferred in some industrial packaging that requires hydrocarbon resistance and barrier properties not obtainable from untreated HDPE.

Affected by weather

Blow molded HIC containers continue to be one of the largest industrial container markets, reaching 1.1 billion lb in 2004. When the economy and housing markets are strong, consumers purchase greater quantities of cleaning products. Companies that produce seasonal products such as pool chemicals, bleach, and other cleaning products tend to see a rise in sales during warmer months. Consumers also tend to dine out more during warmer seasons, increasing demand for commercial cleaning products for restaurants. Some manufacturers predict accelerated growth in light-duty containers for dishwashing liquid. With an expected AAGR of 4.4%, the HIC market is expected to reach approximately 1.3 billion lb by 2007.

Drums, liners, IBCs, and tight-head pails are the second largest blow molded industrial container sector, representing 540 million lb in 2004. Blow molders forecast a lackluster AAGR of 3.5% due to customers' efforts to reduce packaging costs, such as reuse and refilling of durable packaging.

Demand for IBCs is reported to be growing more rapidly than demand for plastic drums, as many end-users find that IBCs' additional capacity saves shipping costs and lessens storage-space requirements. This market is expected to increase to 600 million lb by 2007.

Motor-oil bottles reached 320 million lb in 2004 and are predicted to increase 2.5% per year over the next three years. Many motor-oil container producers say they believe this market has reached maturity, but some container producers anticipate more growth than in the past due to an improved economy and better-than-expected automobile sales. Additionally, the advent of 5-qt oil containers has helped to bolster demand for blow molded bottles. But growth is hindered by extended-use motor oils that need less frequent changing and by the expanding quick-lube businesses that buy oil in bulk and reduce the number of people who change their own oil.

Molders of auto and marine fluid containers expect an AAGR of 3.3%, which will push consumption up to 185 million lb by 2007.

Agricultural chemical containers accounted for 160 million lb in 2004 and are expected to reach 185 million lb in 2007 with an AAGR of 4.9%.

Small sectors grow fast

Gasoline containers are a small market, but one of the healthier sectors of industrial containers, with an AAGR of 7.1%. There is a shrinking number of molders of these containers, and the remaining suppliers are coming up with more ergonomic designs and vent-less containers which are mandated in some states.

Demand for paint and paint-related products in blow molded containers should remain strong from both commercial contractors and do-it yourself consumers. Low interest rates, which spur home sales, and a new gallon-size plastic paint container have contributed to increased resin consumption in this market. Total consumption was 90 million lb last year and is expected to reach of 115 million lb by 2007 with an AAGR of 8.4%.

During 2004, the top five industrial packaging blow molders were Plastipak Packaging, Inc., Owens-Illinois, Inc., Russell Stanley Holdings, Inc., Consolidated Containers Co. L.L.C., and Graham Packaging, Inc.

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

Bart Thedinger

Managing Partner

Mastio & Company