polymer distribution | Analysis
Polymer distribution in Europe by polymer 2014 Source: AMI 2015
LD/LLDPE 25%
PP 31%
POM – 2% PMMA – 1%
PC – 4%
PBT – 2% PA 6/6.6 – 4%
ABS/SAN 8%
PS 7%
Benelux – 6% Poland – 6% Nordic region – 6% Other CEE – 6%
polymer market as resin producers have continued to rationalise their customer base and bottom slice smaller and less profi table accounts, a trend driven by the desire to reduce credit exposure and to cut sales and marketing costs. The pattern of distribution sales refl ects underlying
polymer demand, which means that the largest markets are found in Germany and Italy, closely followed by France and the UK. However, distribution is proportion- ately more important in countries that do not have a strong local polymer production industry or that are located on the periphery of Europe (for example, Portugal, Ireland and the Nordic region). Processors in these countries often have to rely on distributors importing from neighbouring countries. The availability of materials from outside of Europe, particularly from the Middle East and Asia, continues to offer opportunities for distributors, although most of these volumes tend to enter the European market either on a spot or traded basis. The trader market last year was affected by the 6.5% increase in import duties on Middle East-sourced material that came into effect on 1st January 2014 and reduced the region’s price advantage. At the same time, European distributors are looking for opportunities beyond their home territories. Turkey, Russia and Africa’s Maghreb countries are being targeted by a number of players, including Albis, Biesterfeld, Snetor and AMP. Latin America is also an area of key interest, with examples of active players including Biesterfeld in Brazil and SM Resinas in several locations across Mexico and South America.
Shifting dynamics While distributor volumes have grown, the market still remains challenging. Distributors supplying Middle Eastern material, for instance, were impacted by last year’s import duty rise although some tried to mitigate
64 COMPOUNDING WORLD | December 2015
this by bringing in extra volumes in the fi nal quarter of 2013. The effect of this strategy was largely dissipated by the second quarter of 2014, after which the fall in oil prices and the weakening of the euro against the dollar brought other strains to the market. Shortages began to appear, particularly for certain grades of PE, as Middle Eastern producers diverted material to Asia where they could earn better netbacks. European producers also took advantage of the euro’s weakness to be more competitive in deep sea markets that offered better margins, resulting in reduced material availability locally. A string of unexpected force majeure calls by leading
polymer producers just at the time when spring buying was kicking in added to these availability problems, creating an extremely tight market. Such was the impact on the market that processors were having to shut down lines and industry trade associations were lobbying hard for producers to invest in new European production (although the latter could only ease the situation in the long term). Distributors with guaranteed supply agreements were better placed than traders to ride out this storm, but market conditions were very diffi cult for all concerned. In a tighter market, all players in the supply chain
look to reduce cost through JIT production and mainte- nance of minimal stock levels. This makes planning diffi cult as plastics processors only buy material to order. Distributors who did not get their forecasts right got caught out, either by ordering too little or too much from their suppliers. As suppliers are equally trying to produce only what is going to be sold, sudden changes in market demand lead to unexpected material shortages or surpluses. This trend, in combination with the sudden material shortage in the market, made it challenging for the distributors. However, this is where the top players can be seen to win out over traders, resellers and agents through their ability to respond to
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France 8%
HDPE 16%
Polymer distribution in Europe by country 2014 Source: AMI 2015
Italy 19%
UK 9%
Germany 20%
Spain 9%
Other WE 11%
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