The market of soft plastic packaging in Vietnam

The market of soft plastic packaging in Vietnam

With the growth rate of 6.6% in the previous year, the plastic packaging market proved to be a potential industry, contributing to the development of Vietnam plastic industry in general. However, rising input costs have made this industry face many challenges.

Increasing material costs has affected the packaging sector

By the end of October 2018, SCG Group posted nine-month results with $ 11.2 billion from sales, up 7% over the same period of 2017. However, profit in the period was only over a billion, down 19%. For the Vietnamese market, SCG's sales reached US $ 349 million in the third quarter of 2018, up 18% from the same period last year, mainly due to the petrochemical business. For the first 9 months, SCG's sales in Vietnam reached $ 989 million.

Mr. Roongrote Rangsiyopash – General Director and CEO of SCG, said: "Q3 and nine-month results show sales growth in all business units. The decline was mainly due to higher raw material and energy costs."

It can be seen that the packaging sector has experienced significant impacts from the cost of raw materials, Roongrote said. In Vietnamese market, SCG's sales increased in the third quarter of 2018 mainly due to the petrochemical business while it also owns companies in packaging paper and soft plastic packaging.

The plastic packaging industry of Vietnam

Recently, StoxPlus has published a report on the market of plastic packaging in Vietnam. The report shows that the basic problem in the plastic packaging industry in Vietnam is the shortage of raw materials in the country leading to the dependence on the import of plastic. Specifically, the upcoming plastic industry will need 8.2 million tons of plastic each year. However, after all projects are planned, domestic production is estimated to supply 2.34 million tonnes, meeting only 30% of domestic demand by 2023. Thus, despite the projected capacity which will increase in 2019 and 2021, StoxPlus forecasts that Vietnam still needs to face the challenge of importing plastics, as the demand of the domestic plastic industry is increasing.

The development of Vietnam plastic industry in general cannot exclude soft plastic packaging market of Vietnam which is dominated by 14 leading companies with 53.9% market share in 2016. Market of Soft plastic packaging in 2017 reached nearly $ 1 billion, up 6.6% over the same period of 2016. With the current situation of raw materials price, it is expected that the plastic packaging industry will need to make more efforts to overcome these challenges.

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