Plastics – Trends and Perspectives

imageSince 1952, the K trade fair in Düsseldorf has been presenting tangible evidence of the plastics and rubber industry’s global success. The twentieth edition of the K trade fair in 2016 is no different: a benchmark and orientation point for the plastics and plastics processing industry.

Between 1950 and 2015, the consumption of plastics and rubber have risen by an average of 8.5 % per annum. Since the beginning of the new millennium, the growth rates have still been rising by between 4 and 5 %. They do, however, vary significantly from region to region, and change with the product and application.

imageThe rising global population and the overall improvement in living standards are the main factors that drive global growth. The effects of increasing prosperity can be seen in many markets for plastics application, spearheaded by packaging for food and convenience goods, but also in the variety of storage and shipping containers. Infrastructure and construction also require the use of plastics in water, electricity and gas supply systems, as well as in insulation, window profiles and many more. Another aspect is increasing mobility – in cars, lorries and airplanes. Medical engineering is one area of application where polymer materials have become indispensable: without safe, disposable and hygienic plastics products, technical dimageevices and systems, diagnostics, laboratory equipment and the safe application of medical drugs would not be able to comply with current quality standards. This also applies to our modern and widely appreciated sports and leisure products. In their markets, these applications, equipped with or entirely made of plastics or rubber, contribute to the global acceptance and proliferation of polymer materials.

In 2015, the association of European plastics producers, PlasticsEurope, reported a global plastics production volume of 322 million tonnes. A proportion of almost 270 million tonnes was attributed to polymer materials, i.e. materials used for the production of plastics applications. The remaining amount, about 50 million tonnes, were used for the production of coatings, adhesives, dispersions, lacquer or paint. Analyses of the same period published by the International Rubber Study Group IRSG show a global rubber production and consumption volume of almost 29 million tonnes, 12 million tonnes of which were attributed to natural rubber and almost 17 million tonnes were synthetic rubber.

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Market Growth for BOPP films

imageA modest improvement in margins, along with continuing steady growth helped to lift investment confidence in the BOPP film industry last year – but not in China. After years when 60-70% of new capacity was being installed in China, the focus is now shifting to new markets and those with the highest growth potential. Over the next two years new manufacturing will be established in Europe, Africa, Asia and the Americas along with new lines for many of the industry’s more established players. This though will also drive the need for rationalisation of old capacity. The situation looks particularly risky for Europe’s less profitable players where the addition of new players in Poland and Russia is likely to drive the need for upwards of 100,000 tonnes of capacity to go if Europe is to return to the 80% utilisation rate achieved in 2010. This is the equivalent of 4 or 5 lines or potentially one or two producers.

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PO tense situation in Europe

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EU plastics converting companies (mainly SMEs) are facing serious difficulties since early 2015, due to limited availability of polymers. Since early March 2015, the EU polymer industry has declared new ‘force majeure’ Majeures on 66 occasions. This has exacerbated an already tense situation for the EU polyethylene and polypropylene markets and has driven polymer prices to levels not seen in the past decade. From March 2015 to May 2015, EU polymer prices increased by over 40 percent whilst oil prices remained at a record low. As a consequence of this situation, EU plastics converters submitted in 2015 45 requests for tariff suspensions and quotas in seven Member States.
The Polymers for Europe Alliance, initiated by the European Plastics Converters association (EuPC) in May 2015, brought this situation to the attention of the European Commission and the Economic Tariff Questions Group (ETQG), ahead of the July 2016 round of tariff suspension and quota requests. The Alliance emphasised the importance of these tariff suspension and quota requests for the future competiveness of the EU plastics converting industry. If EU plastics converters cannot get access to sufficient volumes of polymers, they will ultimately go out of business.

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Growth in the PE film industry

The demand for PE film has continued to make a slow, steady recovery since 2010. The recession of 2008-2009 saw polyethylene film production drop by 10% and output is still some half a million tonnes below the peak level of 2007. Recovery and growth are no longer based solely on tonnage. With downgauge processes and linear an metallocene grades, it is possible to make and to use thinner films for the same applications.
According to AMI (Bristol, UK), in its recent  tenth edition of the Directory of Polyethylene Film Extruders in Europe, in 2013, for the first time ever, the consumption of linear and metallocene grades by film extruders exceeded the usage of conventional LDPE grades. This trend is here to stay, with AMI forecasting that the use of metallocenes materials in film extrusion will grow at a rate of 3 or 4 percentage points above that for the industry as a whole as more and more extruders develop products using them.

Film extruders have been steadily increasing their use of linear and metallocene resins to adapt to consumer demands, which helps to explain the good growth rates in stretch and shrink film production.   Shrink and stretch films, used to protect goods in transit, each accounted for 1 million tonnes of polyethylene film production in 2013. AMI’s directory shows the importance of this sector with 52% of plants involved in the production of stretch film or shrink film for collation or pallet wrapping.  This trend is reflected across Europe with Germany taking the lead, where 61% of film extrusion sites are producing shrink and stretch films.  The leading producer of stretch film, the Italian group Manuli Stretch, operates one of the largest plants for stretch film in Europe in Schkopau, Germany.  image

Consolidation and restructuring continues to be a major feature of the film extrusion market. The Coveris Group brings together the PE film operations of Britton Group, Veriplast, Unterland and Kobusch. Nortdenia is now part of the Mondi Group and RKW’s took over Hyplast.

Trends in agricultural films market

The European market for agricultural film has been experiencing steady growth over the past decade exceeding half a million tonnes in 2013, according to the report Agricultural Film Market in Europe 2014 [click for more information], recently published by AMI Consulting. Spain and Italy are the largest markets overall, accounting for almost 40% of demand primarily driven by their intensive horticultural activity where large quantities of greenhouse and mulch films are used. In contrast, Northern Europe with vast areas of grass land is a major producer of animal fodder and has significant consumption of silage films both silage sheet and stretch wrap.image

Silage film which is forecast to grow by just over 1% a year over the next five year period is going to be driven primarily by booming biomass production, demand for increasing quality of fodder and reduction of spoilage, increased number of dairy cows, increasing nutritional intake per cow, silage being increasingly fed to horses and haylage being also increasingly baled and wrapped.
Consumption of conventional mulch film in tonnage terms is forecast to decline slightly over the next five years as a result of the relative maturity of the market, shrinking of the area for crop cultivation and the need for the reduction of post-use plastic waste (by downgauging or by using biodegradable films instead).
Market trends for greenhouse film demand are very similar to mulch films as both types of films are increasingly used in combination. The European market is a mature one and with one season films being gradually replaced by films lasting up to 5 years, in tonnage terms the market has seen a decline and the process is expected to continue for the next five years.
The market is increasingly driven by value rather than volume. In order to increase market share in an oversupplied market, film companies will strive to develop innovative customised high performance thinner multilayer films and as well as look at opportunities for further consolidation. Some of the most recent major takeovers include RKW acquiring Hyplast and Biofol Film, ITW Mima’s industrial films business being acquired by the US-based Carlyle Group, Morera & Vallejo acquiring the bankrupt TPM group in Spain and Unterland being acquired by the Britton Group now rebranded as Coveris.  

The relevance of agricultural film

In order to feed a global population which is expected to top 9 billion people by 2050, food waste needs to be eliminated, distribution of food improved and food production increased. At the same time agriculture faces challenges due to changing economic and environmental trends including climate change, biofuel expansion, slowing agricultural yields, rising meat demand and ever increasing calorie intake from a growing global middle class. It is estimated that by 2050 about 70% of the global population will be urban, compared to 50% today.
Although the population increase in Europe is going to be only marginal, European agriculture will continue to play its part in global food production, while simultaneously fighting for its existence in the face of competing pressures for land use. The agricultural sector is forced to produce more food of increasing quality on less land within a shorter space of time using less resources, while generating minimum waste.  Extending the growing season and increasing yields per hectare of land have been and will remain the main drivers for the use of agricultural films.  In addition, plastic films protect the crops, which has direct implications on the crop’s quality.  Films can also improve a farm’s efficiency by reducing the amount of chemicals, water and energy used.

In addition to its consultancy work in agricultural films, AMI also organises the annual global conference for the agricultural film industry. The next Agricultural Film Conference will be held in Barcelona, Spain on 15-17 September 2014. For more information on this conference, contact Jenny Skinner (click to email).

Global PE demand to rise 3,7% p.a.

imageGlobal polyethylene demand is forecast to rise by approximately 3.7% per annum between 2013 and 2018, at a slightly higher level than its growth during the 2003 to 2013 period, says a new report from research and consulting firm GlobalData. The report Global Polyethylene Industry – Emerging Markets in Asia-Pacific to Drive Modest Growth states that this higher-than-historic increase will occur in the US and Europe, primarily in Russia. The US will witness a 2.4% growth rate per annum during the forecast period, in comparison to its 0.7% levels from 2003 to 2013. Meanwhile, demand in Europe, including Russia, will climb at 2.8% per year from 2013 to 2018, almost three times the level witnessed during the last decade.
GlobalData states that these demand rises in the US and Russia will be somewhat offset by a lower increase of 4.8% in Asia, compared to its 6% rate during 2003 and 2013. This will be due primarily to the region’s slower economic growth.  

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Market trends for blow molded plastic bottles

Blow moulded plastic bottles is a market of nearly 4.5 million tonnes magnitude in Europe. Beverages aimageccounted for two-thirds of the market demand in units. The growth trends differ depending on both the drinks category and the geography, but the overriding trend within the beverages market in Europe is toward ‘healthier options’. The demand for blow moulded beverage bottles in Europe is fuelled by continued substitution of glass bottles, cartons and cans. Moreover, consumers tend to make more impulse purchases whist on-the-go, which drives additional demand. These are the main findings in a report published in April by AMI Consulting (Bristol, UK).

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