INSIGHT: EU demand for plastics up on autos and more construction

16 June 2014 17:25 Source:ICIS News

By Nigel Davis

LONDON (ICIS)--Demand from key downstream sectors such as automobiles and, to a lesser extent, construction is helping to drive increased plastics production in the EU, data from the PlasticsEurope show.

The data, released last week, also suggest that stronger downstream demand is helping to absorb more primary plastics production including imports from outside the EU.

The output of plastics products in the EU was up 7.0% in January and February this year compared with the same period of 2013. At the same time, EU plastics production was up 6.6%.

For some time EU plastics products demand growth had been lagging plastics production but the two now appear to be very much in sync. Europe’s automobile industry is beginning to recover from a long, depressed period. EU automobile production was up 10% in January-February 2014 compared with the same period last year.

Construction activity has started to pick up, although there is a long way to go before it comes close to matching the most recent peak period some 18 months or more before the crash in 2008. PlasticsEurope suggests it is on a “slight upward trend”.

Plastics production was “gripped” by the economic crisis, as PlasticsEurope says, but globally has recovered, although the recovery has slowed more recently.

Global plastics demand rose by 3.9% in 2013 compared with 2012 to about 250m tonnes, the trade group says, with polyurethane demand growth the highest at 6.0%. PET (polyethylene terephthalate) demand growth was 5.9% and expandable polystyrene demand growth 5.1%, it adds. Polycarbonate demand in 2013 was flat. It was the weakest performing polymer in the sector.

Primary plastics production in Europe has shown a “more or less steadily increasing trend” since May 2013, PlasticsEurope suggests. The production increase downstream in the processing sector has been more noticeable since the second half of 2013.

The trade association also tracks growth in output of plastics machinery which, it says, has been volatile over the past 12 months with the greatest output being reached in April and October 2013 and in January this year. Strong month to month output growth in this sub-sector in January 2014 was, however, offset by a sharp month on month decline in machinery output in February.

Plastics demand growth in the EU last year was virtually non-existent, estimates based on production indices from the statistics agency Eurostat suggest, and up by just 0.1%.

PlasticsEurope says that 2013 EU plastics demand totalled 46.0m tonnes, with the highest volume demand from polypropylene (PP) followed by low density and linear low density polyethylene (LDPE and LDPE), high density polyethylene (HDPE) and polyvinyl chloride (PVC).

About 40% of plastics sold in Europe are used in the packaging sector and 20% in building and construction. Demand from the automobile industry accounted for 8% of the total in 2013 in the 27 member EU.

The EU enjoys a positive trade balance in plastics with the rest of the world but this has diminished in the past two years. The surplus in 2013, however, of 7.35m tonnes was still greater than the surplus in 2006, 2007 and 2008. The plastics products trade surplus has hovered around 1m tonnes for many years but has trended downwards since 2008.                                                                                                                                                                           

PlasticsEurope estimates that global plastics demand will climb to 303m tonnes by 2018, an average annual growth rate of 3.9% over the 2013-18 five-year period. It forecast strongest growth for EPS but relatively strong growth generally for engineering polymers. Polystyrene growth might be restricted to 2%/year over the period, it suggests.

Demand growth for the highest volume thermoplastics – the polyethyelenes, PP and PVC, will be between 3.4% and 3.9%, it says.

\EU plastics demand by segments, 2013

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By Nigel Davis