Changes in compounding industry in Europe, South America and Asia

12-May-11

The effects of the global recession on the global thermoplastics compounding industry is documented in a series of reports published by Applied Market Information Ltd. (AMI). While the industry continues to surge ahead in Asia and Latin America, the European market has been through a period of shrinking demand that has seen compounders reorganise their operations. A 5% drop in the number of compounders listed in the report illustrates some of the effects of the recession on compounders in Europe. With the market having shrunk by 1 mln tons between 2006 and 2009 it is perhaps surprising that the decline in numbers was not even greater. According to AMI production of compounds recovered in 2010 and amounted to nearly 7.6 mln tons. During the 2009 downturn compounders were more interested in minimising credit risk than seeking to preserve volumes or gain market share. In general terms this means that compounders responded to the recession by seeking to maintain or grow margins rather than chasing volume. That the industry did not see more bankruptcies or fire sales , is testament to their success in achieving this. Asia presents a different picture in terms of how the global recession affected the industry. In the previous edition 841 sites were listed. For the new edition just out, nearly 25% more compounding sites (over 1,000) are listed. While market growth in Asia stuttered as the financial crisis hit in 2008, the industry continued to expand through 2009, albeit modestly but grew very strongly during 2010. Output of compounds is believed to have been close to 11 mln tons for 2010. Compounding demand has also been growing strongly in Latin America- demand in 2010 grew by nearly 7% for the 100 plus companies listed. However, the size of the industry is much smaller compared to Europe and Asia at just over 1.2 mln tons of production for 2010. Structure of compound production also varies by region. In Asia colour compounds are more widely used while masterbatch accounts for a much smaller share of production. PVC compounds share a similar standing in all markets while engineering polymer compounds are more significant in the Asian and European markets.