The Plastics Market in Europe: Review and Preview

© Plastics Europe

It was short though severe – the 2009 world economic crisis. Even though the mood is gradually lifting and the outlook for 2010 is by all means positive the past year also left its mark on the international plastics industry.

The plastics industry has been spoilt. For over 50 years this material saw an uninterrupted success story. While in 1950 only 1.5 million tons of plastic were produced, output reached 245 million tons worldwide in 2008, according to figures from the European Plastics Producers' Association "Plastics Europe". Average annual growth over this period amounted to 9%. Europe accounted for an almost 25% share (approx. 60 million tons) in global plastics production in 2008.

In Europe plastics consumption in 2008 totalled 48.5 million tons with Germany, Italy, France, Spain and the United Kingdom accounting for just under 66% of the European market. Some 38% of European plastic materials are consumed by the packaging industry.

Response to the Crisis

Response to the crisis was varied but nearly all producers were compelled to act: by reducing stocks, minimising lead times, anticipating maintenance jobs, temporarily decommissioning production lines and/or by completely shutting down smaller, non-profitable plants; efficiency measures were and still are the order of the day. Working hours were adjusted, shorter working hours and cuts in temporary workers became necessary almost everywhere.

Looking Ahead

However, things have brightened up and people are now looking to the future. For plastics manufacturers this means that per-capita consumption is expected to rise – moderately but continuously. For North America, Western Europe and Japan industry insiders anticipate annual growth of some 100 kg per capita. Even though far more substantial growth is anticipated for Asia and Eastern Europe, forecasts suggest per-capita demand in these regions in 2015 will still lag far behind consumption levels on such traditional markets as North America, Western Europe and Japan.

Future Challenges

Plastics Europe feels the industry is well-equipped for future challenges: global population will continue to grow and there will be great social and demographic change. Which will shift the focus onto combating hunger and drinking water shortages. Globalisation and urbanisation trends mean ever new jobs, ever increased mobility and ever more varied communication options. Likewise, the much discussed issue of climate change has far-reaching consequences: energy efficiency is taking on an entirely new dimension for people both at home and in the workplace with the need for new sources of fossil fuels becoming ever greater and the search for new energy mixes being increasingly promoted. People's growing health awareness worldwide is another mega trend leading to improved diagnostics and treatment as well as to the development of continuously improved medical devices, prosthetics, etc. Last but not least, technical progress cannot be stopped either: new possibilities such as the versatile applications for nanotechnologies or the development of ever faster and cheaper computer chips make the use of innovative plastics ever more important. One focus in nearly all of these technical applications is the need to reduce weight. All of these so-called mega trends therefore hold high potential for the plastics industry – but they also bring risks.

Production Hub

In parallel to these developments a production hub in the Middle East is developing. In Saudi Arabia, Qatar, Kuwait, Abu Dhabi and Iran, in particular, high production capacities are currently being created for petrochemical products and plastics. Here state-of-the-art plants are being built – driven by the availability of low-cost raw materials. These petrochemical plants are often built as joint ventures involving West European and Asian enterprises. As a result, experts expect the Middle East’s share in total global output to grown sizeably in future. While the share in global PE production still stood at 10% in 2004, it is expected to reach 18% by 2014. Regarding PP production this region had an approx. 5% share in total production in 2004 but this is expected to grow to as much as 13% by 2014. International competition is therefore becoming keener for both plastics producers and processors.