Massive plastics processing investments in Africa drive double digit growth in polymer demand

Massive investments are underway in plastics processing operations in Africa driving double digit growth in polymer demand. With much of this polymer still currently imported, it is now one of the most exciting markets for polymers in the world today, according to Applied Market Information Ltd (AMI Consulting). However, Africa is a complex market with market conditions vastly different in the well-developed North and South African markets compared with most other Sub-Saharan countries. Nigeria, Egypt and South Africa currently account for nearly half of polymer demand in the continent and for nearly all polymer production for the region. Despite significant investments in new capacity in these three countries, Africa remains a net importer for all resins and is expected to remain so for the foreseeable future. Commodity plastics dominate the market with polyolefins accounting for about 60% of demand. This is partly because of the limited amount of manufacturing for automotive, domestic appliances and other technical products in the region. The largest volume is accounted for by polypropylene resins with the material being widely used for raffia production for bags and sacks. However, PET resin has been one of the fastest growing markets where the growing use of PET bottles for drinks is replacing LDPE pouches which have traditionally been used. This attractive growth in demand for plastic products has attracted abundant foreign investment, especially from China and India which is expected to carry on in the future. In addition, there is some off shoring by European companies, especially in North Africa. The development of duty free zones is also encouraging investment in plastics processing operations. Another key driver for polymer demand is infrastructure development and building activity since nearly one-quarter of polymer demand in Africa is for building and infrastructure related products. A growing middle-class and the resulting increase in disposable incomes are also playing an important role in driving plastic demand. Rising wealth also drives the development of organised retailing and the selling of food via supermarkets and, at present, packaging applications account for just under half of the polymer market across Africa. Growing urbanisation will also impact on demand for packaged food but it will also have implications in terms of building methods to ensure more energy efficient and safe dwellings. However, lack of sufficient local polymer production is the biggest challenge faced by the African plastics processing industry with most companies reliant on resin imports, mainly sourced from the Middle East or Asia. Exchange rate fluctuations of local currencies against the dollar add further uncertainty to the market, making it harder to compete against cheaper Chinese imports of finished goods. In general, power supply in Africa is tight but also erratic and unreliable in many countries, which can dramatically reduce effective utilisation. Political instability is another key challenge in Africa, both north and south of the Sahara which can seriously impact on investor confidence and local demand. It is clear that plastics will be called on to play a vital role in this changing continent. In its report, AMI forecasts 8% pa average increases in Africa over the next five years, with diverse levels of annual growth varying from 5% in South Africa to up to 15% in parts of West Africa.
  More News  Post Your Comment
{{comment.Name}} made a post.




There are no comments to display. Be the first one to comment!


Name Required.


Email Id Required.

Email Id Not Valid.


Mobile Required.

Email ID and Mobile Number are kept private and will not be shown publicly.

Message Required.

Click to Change image  Refresh Captcha