markets feature | European polymer demand
and Slovakia and to a lesser extent Hungary. Despite the Great Recession and the eurozone crisis, the countries of Central and Eastern Europe continue to offer the best prospects for growth in the European plastics industry, although the smaller economies remain vulnerable to external shocks.
Consumption of polymer in Europe 2009-2019
by developments in closures, automotive applications and some pipe applications, although HDPE fi lm markets were weak for similar reasons to LDPE/LLDPE. The PP market also saw a positive development
driven by increasing automotive production, which was up 4% in 2014 after two rather fl at years, and strong demand for food packaging and medical/hygiene products. Polystyrene, however, remains structurally weak with the market continuing to be eroded by its relatively high price, supply issues and the attrition of processing capacity. The aforementioned rise in automotive production during 2014 helped drive demand for most of the engineering resins. There was also growth for electrical applications driven by the switch to LED lighting, but building markets on the whole remained relatively subdued which contributed to fl at demand for PVC and a 1% decline in EPS volumes.
Winners and losers As has been the trend for several years, demand was stronger in Central and Eastern Europe compared with Western Europe. Overall Western Europe showed very little volume growth, while Central and Eastern Europe saw increased demand of nearly 3% in 2014 and most of the countries in the East now have a polymer demand well ahead of where they were in 2007. Poland was the only country in Europe which did not
technically go into recession in 2008 and 2009 and, although overall polymer demand growth has weak- ened, it is still managing to show some growth driven by appliance manufacturing and consumer packaging and a recovery in automotive production. Automotive production has also helped to sustain demand in some of the other Central and Eastern European countries, particularly the Czech Republic
16 COMPOUNDING WORLD | August 2015
In Western Europe, Spain appears to be showing a modest recovery driven by improved consumer confi - dence, a revival in its automotive industry and a process- ing sector now more geared to export. Even so demand in Spain is still 25% down on what it was in 2007. Germany remains one of the stronger markets thanks to the strength of its manufacturing industry, which has benefi ted from strong export trade in recent years. Demand in Germany is almost back to where it was in 2007 and as a result the market there is now nearly 40% bigger than the second largest market of Italy. In 2007 the German market was only 20% larger. Italy and France continued to struggle with further
contractions among processors despite a healthy pick-up in car production. With the exception of Germany, nearly every country in Western Europe has a market demand still 10% or more below their 2007 volumes.
The price is not yet right Polymer pricing trends during 2014 were yet another example of the roller-coaster ride which seems to now be a regular feature of the market. During the fi rst half of the year polymer prices were trending up, driven by rising feedstock costs and an increase in import duties. However, the market turned in August as oil prices started to plummet and with them associated feed- stocks which quickly fed through into falling prices for most resins. This contributed to the weakening demand in the fi nal quarter as processors held off buying material in the hope of lower prices. However, this left them vulnerable to supply shortages that arose because of the weak euro and the effect of the duty increase. Middle East imports began to dry up for certain
materials as producers could get better netbacks in Asia and other dollar-denominated regions. European producers also sent more resin to export markets where they could get better prices and margins even at the expense of their European customers. Prices hit the bottom in February 2015 and have since
rebounded strongly on the back of rising oil and feedstock prices and increasingly tight supply. Polymer producers were easily able to get price increases through because of serious shortages in some materials particularly polyolefi ns. A spate of force majeures across the continent also added to the diffi cult supply situation. Europe faces a number of other challenges which have been highlighted by the pricing and supply issues
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