|European thermoplastic business was severely affected by weak economic conditions in 2008 and is estimated to have lost over 5 years of market demand. While markets were still relatively stable in H1-08, the economic downturn in Q3 and Q4 of 2008 sent sales plummeting in a sector that witnessed 34 years of successive growth. The volume of plastics processed in Europe underwent a significant downturn in 2008, when consumption fell by 7.5% to 48.5 mln tons. Compelling Facts about Plastics 2008 compiled by PlasticsEurope (www.plasticseurope.org), the European Plastics Converters Association (EuPC) and the European Association of Plastics Recycling and Recovery (EPRO), focuses on European plastics production, consumption and recycling. Figures show that global plastics production (including thermoplastics, polyurethanes, thermosets, elastomers, coatings, sealants and PP fibres) dropped by 6% in 2008; from a record 260 mln tons in 2007 to some 245 mln tons.
Despite the setbacks, however, Europe remains the world�s most important plastics producing region, accounting for 25% of global output of around 60m t in 2008 � slightly ahead of the NAFTA region, which produces some 23% of all polymer materials.
According to Plastics Europe, production and consumption decreased by 20% year-on-year throughout Europe in H1-09. Although signs of a slight improvement are growing, the European plastics processing industry is forecast to contract by an additional 3-4% during 2009. In 2008, the European plastics recycling ratio stood at 51.3% � an increase of 1.3% over 2007. Progress differed from country to country, with seven EU member states, along with Norway and Switzerland, achieving recycling rates of more than 80%. Germany, which recovers and recycles over 90% of its post-consumer plastics waste, ranks third on the list of countries, and has the most successful recycling schemes and is among the four that are close to meeting the European plastics industry�s goal of diverting waste streams from landfills.
Applied Market Information (AMI) has attempted to quantify the slump in Europe�s plastics market in 2008- Demand for thermoplastics sank to 38 mln tons in 2008, an 8% decrease against 2007. It forecasts that the current crisis will lead to noticeable consolidation within the industry. In Q4-08, polymer throughput decreased by an average of 20-25%.
Reduced consumption levels affected all thermoplastics, applications and markets, with varying degrees of severity. While several packaging, medicine and hygiene applications did relatively well, construction and the automotive industry were severely impacted. The decline was relatively small for PET, mainly due to its use in the packaging sector. Consumption of polyolefins was 8-10% worse than in 2007 mainly due to poor demand from the construction market. PVC fared worst in the downturn, with a market contraction of more than 11%. Consumption of technical thermoplastics, where growth rates were about double those of standard thermoplastics over the past five years, receded by 7% in 2008. Due to its strong dependence on the automotive and the electrical industries, this plastics market segment probably will remain weak in 2009. Dwindling demand for thermoplastics is being most vividly felt in West Europe, particularly in the UK, Italy and Spain where demand dropped by double-digit figures. Germany�s plastics processing industry was least affected by the downturn. According to AMI, the decline in Central and East Europe only began at the end of 2008 and reached historically low levels in Q1-09. European polymer demand could fall another 3-4% in 2009, following the massive destocking which hit commodity and engineering plastics. With GDP in the EU-27 countries predicted to decline by 4% in 2009, AMI does not expect a quick recovery for the plastics industry. As plastics processing is a mature market in Europe, AMI believes its success will be tied increasingly to economic developments in future. Based on predictions of economic improvement in 2010, the research group expects thermoplastics consumption to grow markedly in the period 2010-2013. Packaging markets are thought likely to reap the most benefits, especially in Central and East Europe. Medical plastics applications are also predicted to increase their market share. To secure their long-term survival, European converters will have to be increasingly innovative, more technology oriented and more cost efficient, while keeping debt under control, PVC showed the poorest performance and declined by 11% as production of pipe, cable, window profile, automotive and flooring products market declined heavily due to weak infrastructure investment and construction activity was reduced due to financial constraints. It seems that the PVC demand is set back by almost 10 years. PS market shrunk by 9% while ETP declined in by 7% in 2008 and continued to be weak in 2009 because its major market of automobile and electronic markets were weak. Some hints of recovery in markets was seen in mid 2009, primarily driven by the packaging sector. But processors are still buying polymer strictly to order, rather than rebuilding stocks to former levels. The destocking by converters in the fourth quarter affected all polymers, applications and markets, although to a greater or lesser extent.