Europe - Despite a plethora of challenges ranging from waste in the oceans to several cases of force majeure at raw material suppliers, Europe's plastics industry is looking forward to K 2016 in a robust state and with cautious optimism; but there are also obstacles to overcome.
Applied Market Information (AMI), a consulting firm for the plastics industry, recently concluded that Europe's plastics industry "is once again undergoing a period of transformation and change and still struggles to shake off the stagnation caused by the great recession of 2008-2009 and the subsequent crisis in the euro zone in 2012-2013." AMI predicts a yearly growth rate in polymer demand of just over 1% until 2019.
Overall, European polymer producers are optimistic. For example, Borealis CEO Mark Garrett says that margins in the integrated polyolefin industry have reached historic dimensions. He notes that stable demand combined with supply shortages, in particular as a result of unplanned production downtimes, had the impact of raising polyolefin prices.
Producers satisfied, plastics converters busy
Reports by industry associations in several countries show growth and indicate improving prospects for Europe's plastics processing industry. Even in Italy, where consumption could be called weak at best for some time now, the machine manufacturers association Assocomaplast sees a sharp upturn in orders. In Germany, the sector enjoyed moderate growth even after 2014's record-breaking year. Still, Dirk Westerheide, president of the German Association of Plastics Converters (GKV), laments supply shortages and extremely volatile prices for raw materials, particularly for polyethylene and polypropylene.
European plastics converters had trouble getting the required raw materials in the past year. Several large polyolefin plants suffered long downtimes and the procurement of raw materials on international markets was complicated by global economic and trade conditions, including not only the relative weakness of the euro against the US dollar, but also the continued high demand for plastics in Asia and the US. However, there are signs of a less volatile price development this year.
This situation caused the European Plastics Converters Trade Association (EuPC) to launch the "Alliance for Polymers for Europe" in order to "provide detailed information on the current polymer market, to assist raw material convertrrs through the network of national plastics associations, and to assist companies in requesting the suspension of certain EU import duties to counter shortages on the polymer markets."
In February, the Alliance for Polymers for Europe launched their pan-European customer satisfaction survey to recognise and reward Europe's best polymer manufacturers. "We launched the Best Polymer Producers Awards for Europe in order to re-establish good communication between polymer users and their suppliers, which has obviously suffered recently", says Alliance Chairman Ron Marsh.
Energy costs are of great significance for the entire plastics industry. Particularly vocal criticism is being voiced by companies across all industries in Germany, where energy costs are among the highest in Europe. Germany's chemical industry is also concerned about its declining global competitiveness, particularly against North American companies that can benefit from shale oil and gas. That is why many are currently watching petrochemical giant Ineos very closely, which recently began exporting ethane from the Marcellus Formation in the US to Norway. In a few months, the first shale gas-based polyethylene from Europe is expected to hit the market. Ineos is also intent on starting shale gas extraction in the UK. However, no fracking is planned for 2016. The company wants to use shale gas both as an energy resource and as a raw material for polymers.
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