POLYMER SUPPLY | MARKETS
Distributors increase profits in harsh market conditions
In polymer supply, Europe is increasingly becoming a distributors’ market, writes AMI Consulting. Producer partnerships are key to success, the consultancy says in this article, based on its new market report.
During the past three years, the European polymer distribution industry has been facing unprecedented challenges, including a pandemic, the Russian war in Ukraine, disruptions in logistics brought on by the Red Sea crisis and the unrest in the Middle East. In addition, there has been a notable surplus in the plastics market in a number of polymer categories, most notably polyolefins. Competitive pricing and
excess supply resulted from increased manufacturing facilities, particularly in the US, and a decline in the market for consumer durables. In the meantime, rising energy costs and competitive imports, particularly from the US and Asia, put pressure on prices and margins, posing a challenge to European producers.
Within this complex
environment, the polymer distribution industry has managed to remain strategi- cally important in the polymer industry value chain. In 2023, over 4.6m tonnes of polymers were distributed throughout Europe, making up around
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Value added by distribution in the EU in 2024 (€ million) Source: AMI 2024
17% of the total demand. Polymer distribution generated revenues of over €10bn, with an added value of €1.2bn (27% more than in 2020). Polymer distributors have demonstrated that polymer distribution is still a profitable industry by making use of industry dynamics to increase profits despite the constraints presented by the current situation of the market.
Partnerships These days, the industry is characterised by the rise of distributors collaborating with overseas polymer producers. During the past few years, the industry has seen a significant growth in imports from the US, Asia and the Middle East. Long-term importers into Europe have been strength- ening their relationships with local distributors and delivering larger-than-ex-
pected volumes to them. Since there is more room for their material in Europe due to the growing imbal- ance between supply and demand for polyethylene (and soon, polypropylene as well), these suppliers have a strategic interest in the continent. Europe is increasingly becoming a distributors’ market, as European producers in difficult circumstances seek to reduce complexity while overseas producers find in local distributors precious allies to place their material. In 2023, Italy led the sector in terms of distribu- tion sales with a market share of almost 20%, thanks also to the distributors’ activities linked to imports. Germany followed with a 16% share, while Spain’s robust distribution sales granted the country third place in the ranking. Similarly to Italy, the
increasing desire of foreign producers to establish themselves in the continent contributed to place Spain in the top three.
M&A activity
Due to rising competition and low demand, M&A activity is still very much occurring in the European distribution sector. Larger, more resilient companies are typically the result of industry consolidation, as they are better equipped to handle market fluctuations and seize expansion possibilities. Achieving economies of scale, grow- ing market share, diversify- ing product offerings, and enhancing competitiveness have been the primary force for consolidation. Nonethe- less, the significance of transactions carried out as financial investments – espe- cially those made by private equity firms – is growing.
November/December 2024 | FILM & SHEET EXTRUSION 37
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