Thermoplastic markets slow in wester Europe

Thermoplastic markets slow in wester Europe

Growth rates for 2000 at lowest rate for five years
Demand growth for thermoplastics materials during 2000 was about half the rate achieved during 1999, according to AMI's latest West European Industry Report just published. Consumption of polymer grew by just over 3% overall to give a market demand of 31.6 million tonnes. This is in line with average trends for the previous decade but is the lowest rate of increase for the industry in five years pointing to a marked slowdown for many markets. AMI attributes the slower growth to destocking through the supply chain after inventory build ups in late 1999 because of concerns about potential Millennium bug problems coupled with falling prices (processors didn't see the need to restock) and plentiful availability in many resins as new capacities came on stream. The outlook for 2001 is that growth will slow even further with AMI predicting little more than 2% overall growth for the industry.

These trends were definitely more marked for commodity thermoplastics as opposed to engineering resins. AMI reports demand for commodity materials (i.e. PE, PP, PS, PVC and PET) grew by 2.7% in 2000 compared with 7.4% for engineering materials. Indeed in some fast growing sectors such as polycarbonate the market was characterised by very tight supplies and double digit growth.

Of the commodity markets, polypropylene was one of the worst affected with trends in processor destocking further exacerbated by weakening demand in automotive and mobile communication products in the latter half of the year. The market grew by less than 2%, compared with rates of 6-7% per year achieved through most of the 1990s.

The scenario for most of the other commodity polymers was a market development broadly in line with historical trends. So although growth may have been weaker than in 1999 it fell into line with the trends observed for the previous decade. PET was thus once again a very strong performer, with growth of 14% over the previous year, driven by ongoing packaging developments. PVC at just over 1% continued the pattern observed for the material for several years now, with weakness in flooring and packaging markets offset by some growth in building product sectors.

The engineering resin market saw growth of 7.4% during 2000 over the previous year to reach a market size of nearly 2.5 million tonnes. All materials enjoyed substantial increases in demand but with particularly notable increases in polyamide and polycarbonate markets. These markets have benefitted from increasing application in a variety of technical and performance products in the automotive and telectronics sector.

For the second year running the UK market was the weaker of the major countries, although not as far behind as it had been in 1999. Processors in the UK continued to suffer from the high value of the pound against the Euro. After having enjoyed high levels of inward investment for telectronic products and automotive production in the 1980s and early 1990s, the country is now starting to see some of that production capability close and located to Central Europe or Asia.

Germany, France and Italy all experienced similar growth trends in thermoplastics demand at around 3%. However, this represented better than average for Germany and a worsening performance for Italy. In Germany the industry was buoyed by strong export markets and consumer demand for electrical products and cars, but was marked down by weakness in the building industry due to a lack of new construction projects and less renovation work. Demand growth in Italy was largely led by developments in packaging markets and electrical household appliances, with the agricultural sector and building markets showing weaker demand. French demand growth was marked down by the continued weakness of the PVC market because of the replacement of PVC bottles by PET in the mineral water sector. As in most other countries PP growth was well down on previous years, in large part a result of destocking by processors, particularly during the first part of the year. Spain showed significantly the strongest growth thanks to ongoing inv
estments in telectronics and consumer goods, as well as increasing demand for more sophisticated forms of plastics packaging.