The European plastics industry is tackling challenges on multiple fronts. In packaging, by far its biggest market, it has become a victim of its own success, particularly as the ideal material for single-use applications and people on the move. In building and construction, some infrastructure projects may go on hold as governments divert some funds away from infrastructure projects to defence, although business is being boosted as consumers get help to improve energy efficiency in their houses. In automotive, component suppliers are suffering because car makers have been cutting production – not as a reaction to reduced demand, but because they cannot obtain the chips they need for their electronics.
Since early 2019, COVID-19 has had major effects on production, occasionally positive but mostly negative. And now, just as Europe and the rest of the world was recovering from the devastating two years of the pandemic, we have the tragedy of the Ukraine conflict.
Inflation across the EU hit an all-time high of 7.5% in March. S&P Global Economics said on March 30 that it expects eurozone growth to be 3.3% this year, compared to 4.4% in a previous forecast, and inflation to reach 5% this year and stay above 2% in 2023.
“In the past, high crude oil prices weighed negatively on European plastic demand (see chart) ,” says Wiesweg. Prices soaring further could see consumer disposable income slumping, impacting retail sales. Sectors driven by consumer discretionary income like white goods, consumer products, and automotive would fare poorly as buyers try to conserve cash. “In the short to medium term, Europe could potentially see a demand contraction across polymers.”
Plastics processing is on course for the circular economy
Germany remains the powerhouse of the European plastics industry, with its multiple strengths in materials, equipment, and processing capability. But some sectors are hurting all the same. According to German plastics processing industry umbrella organisation GKV, industry sales increased by 12.6% to €69.4 billion in 2021, but member companies remain under a lot of pressure to produce good results. It cites “exorbitant cost explosions” for raw materials and energy, as well as the many delivery delays and resulting order suspensions, particularly in automotive supplies.
The automotive sector has provided a unique set of problems. Several European car makers have temporarily shut down production in recent months, with important negative effects in the supply chain, including the permanent closure at some processors. Passenger car registrations fell by 2.4% in 2021 to just below 10m units across the 27-country EU, according to the European Automobile Manufacturers Association, ACEA. Jincy Varghese, demand analyst at ICIS, forecasts EU automotive output to grow 17% in 2022, although it will still be down 26% from 2019 levels. A healthy recovery is only likely in the second half, she said in February.
The overall economic outlook for 2022 remains very mixed, said GKV president Roland Roth at the association’s annual results conference in early March. Around half of association members expected sales growth when poled in the run-up to the conference, but a good quarter expected further falls. Several were thinking about relocating or terminating production.
European machinery makers in good shape
The picture is brighter with European plastics equipment suppliers. Thorsten Kühmann, Secretary General of EUROMAP, Europe's Association for plastics and rubber machinery manufacturers, said in March that member companies' order books were “filled to the brim. The current year will therefore be another very good year. We expect sales to increase by 5 to 10%.” However, here too, rising prices and now the war in Ukraine are increasing uncertainty.
Dario Previero is president of Amaplast, the association of Italian producers of plastics and rubber machinery and moulds. At the end of last year, he said: “According to our estimates, at the close of 2021 production should be a hair’s breadth from pre-pandemic levels, up 11.5% with respect to 2020. The clear recovery recorded in 2021 gives us good reason to expect performance beyond pre-crisis levels in 2022.”
Ulrich Reifenhäuser, CSO of Reifenhäuser Group and also chair of the K exhibitor advisory board, says the company has “an extraordinarily positive” order backlog for the current year. “A major factor here was the extremely high demand for our melt-blown nonwovens lines, which have made a decisive contribution worldwide to being able to produce sufficient medical protective masks to combat the pandemic - especially in Europe with local production capacities.”
Packaging challenges
High and escalating resin prices globally means the packaging market is under continuing pressure, says Liebig. “Given that recyclable granular is now at the same price as virgin polymer was 12 months ago, the impetus to lightweight now stretches across all packaging material substrates, not just virgin polymers. We continue to focus on reducing material usage by improving the process and enabling our customers to produce ever thinner-walled parts.”
The move towards tethered caps (mandatory from 2024 under Single-Use Plastics Directive, or SUPD) and extensions of Extended Producer Responsibility (effective 2023) will inevitably have a strong influence, as does the new EU Packaging Levy on non-recycled packaging waste, Liebig says. (Since Jan 1, 2021, the EU charges member states €0.80/kg of plastics packaging waste that is not recycled. States are free to choose how to finance the levy.)
The European plastics industry is in fact having to contend with various pieces of legislation relating to plastics waste. For example, there is now a mandate that 55% of all plastic packaging in the EU be recyclable by 2030, as well as the levy on non-recycled plastic packaging waste. Some countries are also introducing local legislation (Spain and France for example), making the playing field not as level as it should be.
Recycling on the rise
“New legislation and targets for the recycling of plastics and the use of recyclate are changing the way the whole plastics industry must operate,” says Elizabeth Carroll, Consultant, Recycling and Sustainability, at AMI Consulting in Bristol, UK, which has a new report out on mechanical recycling in Europe. “The mechanical plastics recycling industry, therefore, has become the focal point for investments, acquisition, and expansion,” she says.
Plastics recyclate production in Europe was 8.2 million tonnes in 2021 and is forecast to grow at a rate of 5.6%/year to 2030. That compares with the 35.6 million tonnes of commodity plastics that entered the waste stream in 2021. “This implies that Europe achieved an overall plastic recycling rate of 23.1%,” says Carroll. That figure is most likely to rise as the plastics industry makes major investments in recycling technologies of diverse types.
The picture of how to convert recycled plastics into high-value products is brightening. Says Engel’s Engleder: “Thanks to horizontal networking along the value chain, we will no longer have to downcycle materials in the future, but can actually re- or even upcycle them. If we exchange information and data across companies, we will be able to recycle plastic waste and produce high-quality plastic products from it again. Digital transformation is the prerequisite for rapidly advancing the issues of sustainability.”
Michael Ruf, CEO of KraussMaffei, which has injection and extrusion technologies under its belt, says: “Circular Economy is not only an ecological but also an economic imperative. It is therefore a supporting pillar of KraussMaffei's product strategy. Customers have already recycled more than one million tons of plastics with our systems.”
Polymer suppliers going green
European polymer producers are making major efforts to improve the sustainability of their products. At polyolefins and compounds major LyondellBasell, Richard Roudeix, Senior Vice President - Olefins & Polyolefins Europe, Middle East, Africa and India, says: “Becoming climate neutral by 2050 requires the industry to go through a deep transformation in a relatively short time frame, especially considering that some technologies to completely decarbonise our processes are still in early phases of development. Currently, high costs for energy are compressing industry profits at the exact moment the industry needs additional funds to make decarbonization investments.”
Polymer suppliers have not been entirely eye to eye with European policy makers on how to move to a green economy, but opinions are converging. “LyondellBasell believes alternative government policies and voluntary measures are more effective than relying uniquely on national taxes in achieving environmental goals,” says Roudeix. He suggests that a fee based on a product’s recyclability could be used to fund improvements in plastics recycling infrastructure and programs.
K 2022 - the world's most important trade fair for the industry
In 2022, as every three years, K in Düsseldorf will once again be the most important information and business platform for the global plastics and rubber industry. Nowhere is the internationality as high as in Düsseldorf. Exhibitors and visitors from all over the world will come together and take advantage of the opportunities from 19 to 26 October this year not only to demonstrate the industry's capabilities and present innovations, but also to exchange views on the situation of the plastics and rubber industry in the various regions of the world, discuss current trends and jointly set the course for the future.
