Strategic Analysis of the European Plastic Packaging Additives Market

19-Aug-09
Safe, Value-enhanced products are beneficial for companies in the long-term, thereby driving growth in the European plastic packaging additives market as per a report by Frost & Sullivan. Packaging resins such as polyvinyl chloride (PVC), polyethylene (PE) and polypropylene (PP) are the most widely used packaging products. Although products such as plasticisers and impact modifiers are mainly used in PVC, the market for PVC is not large or fast growing. Additives for PP and PE, used in most food contact and bottling applications, could offer the best growth opportunities. The migration of plastic additives into food products is a challenge for additive manufacturers, particularly plasticisers that are used in relatively high quantities. The migration levels are set at a low level and legislation is likely to get stricter over time. Hence, companies have begun to take extra efforts in terms of research and finance to offer products that do not face any approval hassles. Approved products, perceived to be safer, have a greater preference. The recent economic downturn has affected several application segments for plastics, with the automotive and construction being the worst hit. Companies have begun to seal operations on a temporary basis, while some have declared a permanent closure of plant operations. As a result, the market for plastic additives, used to enhance the properties of plastics, has declined in volume. The market for plastic additives in packaging applications will continue to marginally decline until 2010. It is important that companies insulate themselves from declining sales by internal restructuring and lean manufacturing. In addition to lean manufacturing and improved process efficiency, companies should provide innovative products that can render cost saving plastic compounders. Food-contact packaging is challenging, while at the same time, lucrative for companies. The marginal decline is only a temporary trend poised to recover soon. Pharmaceutical and medical packaging will continue to show minimal volume decline. Within the cosmetics and personal care packaging, the key growth area will be to offer products that enhance the aesthetics of packaging. The migration of plastic additives into food products is a challenge for additive manufacturers, particularly with plasticisers that are used in relatively high loadings. Migration levels are set at a low level and legislation is likely to only get stricter over time. Hence, companies have begun to take extra efforts in terms of research and finance to offer products that do not face any approval hassles. Plummeting of prices, low demand and a negative sentiment in the market are the current challenges faced by the European plastic packaging additives market. Furthermore, regulation continues to be a restraint as companies explore new technologies and applications. Additive toxicity, or even the perceived toxicity of additives, presents another challenge. Due to the Regulation, Evaluation, Authorisation and Restriction of Chemical Substances Programme (REACH), additive manufacturers need to prove the safety of their additives. Plastic additive manufacturers are trying to move away from metal-based additives such as heat stabilisers toward natural mineral and organic compounds.
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