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Focus: European plastics industry braces for more challenges

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Focus: European plastics industry braces for more challenges

The European plastics industry is tackling challenges on multiple fronts. Since early 2019, COVID-19 has had major effects on production. And now, just as Europe and the rest of the world are recovering from the devastating two years of the pandemic, we have the Ukraine conflict.

Discussing the situation in late March, Martin Wiesweg, Executive Director Polymers EMEA at consultant IHS Markit, said that the crisis is weighing heavy on the plastics business, in terms of cost inflation, the worsening of supply chain bottlenecks, including energy supply, while also raising the spectre of demand shock amid the fear of global stagflation.

Crude oil 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. “In the short to medium term, Europe could potentially see a demand contraction across polymers,” said Wiesweg.

Plastics processers face higher prices

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.

GKV president Roland Roth called for a reduction in government surcharges on energy prices. As for material prices, he said recent increases have been “almost insane.”

Alarm bells have been ringing over energy prices at Unionplast, which represents Italian plastics processing companies. “The uncontrolled increase in energy costs and the growing difficulty in finding raw materials are a deadly mix for our sector and create the real risk of not being able to meet the demands of our customers. This situation has inevitable consequences also on the prices of our products,” says Marco Bergaglio, President of the association.

Machinery makers in good shape

The picture is brighter with European plastics equipment suppliers. However, here too, rising prices and the war in Ukraine are increasing uncertainty.

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 was the extremely high demand for the company’s melt-blown nonwovens lines, which have made contribution worldwide to being able to produce medical protective masks.

“We will close the 2021/2022 business year with a significant increase over the previous year. Material bottlenecks are currently one of the major challenges. So far, we have managed to avoid delivery delays as far as possible,” said Stefan Engleder, CEO of Engel, in mid-March.

Gerd Liebig, CEO of Sumitomo (SHI) Demag, says that overall, consumption figures are good. Sales of machines are on track to surpass pre-pandemic levels at the company too.

“Demand continues to increase for all-electric models, and we anticipate this ratio will continue to increase,” says Liebig. “We’re forecasting further increases in 2022 in the automotive and consumer sectors. A decade ago, 20% of our machines were fully electric; now it is more than 80%.”


EU Plastics industry production trends, 2011-2021. The sharp decline due to the COVID-19 pandemic in the first half of 2020 was followed by a strong recovery. (Courtesy: Plastics Europe/Eurostat)

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 European plastics industry, in fact, has 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.


Plastic bottles, cups and bags were once considered rubbish but are now useful feedstock. (Photo: SABIC)

On the subject of bioplastics, the European Bioplastics trade association says that bioplastics still don’t obtain the same degree of support that other innovative industries receive in Europe, which discourages investment in R&D and in production capacities.

Despite these challenges, development in European bioplastics is very positive. Production capacities for bioplastics in Europe were close to 600,000 tonnes in 2021 and can be expected to increase to around 1,000,000 tonnes within the next five years.

Recycling on the rise

AMI Consulting has a new report out on mechanical recycling in Europe. 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.

“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. Digital transformation is the prerequisite for rapidly advancing the issues of sustainability,” says Engel’s Engleder.

At Sumitomo (SHI) Demag, CEO Liebig agrees that recyclate processing in itself is not an insurmountable technological challenge. “The greatest challenge is achieving comparable component performance and stabilising non-uniform material properties through intelligent process monitoring,” he 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,” says Michael Ruf, CEO of KraussMaffei.

“We are observing many groundbreaking developments that significantly improve the sorting and washing quality of waste. The pyrolysis process has also recently been significantly enhanced so that this recycling process can be carried out in a much more energy-efficient way,” says Marina Matta, Team Leader Process Technology Engineering Plastics, Coperion.  

Polymer suppliers going green

European polymer producers are making major efforts to improve the sustainability of their products.

LyondellBasell aims to produce and market two million metric tonnes of recycled and renewable-based polymers annually by 2030. It has already launched plastics made from mechanically and chemically recycled plastic waste, as well as bio-based feedstock.

“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,” says Richard Roudeix, Senior Vice President - Olefins & Polyolefins Europe, Middle East, Africa and India. “Currently, high costs for energy are compressing industry profits at the exact moment the industry needs additional funds to make decarbonization investments.”  


LyondellBasell is developing its own chemical recycling technology, MoReTec, at a pilot plant in Ferrara, Italy. (Photo: LyondellBasell)

In 2019, SABIC launched certified circular polymers produced by upcycling used plastics. “However, the reality is that there is currently greater demand for recycled plastics than the supply available,” says a representative. “Manufacturers need to find a way to scale up in order to instigate real change.”

Greater regulatory support from governments is required to help industry players scale new techniques such as chemical recycling, says SABIC. “For example, it is important that the European regulatory framework recognize chemical recycled resin as equivalent to virgin resin produced from fossil feedstock in order to increase availability and drive scalability.”

Virginia Janssens, Managing Director, Plastics Europe, says its members support the 30% EU mandatory target for recycled content in plastics packaging by 2030 and have recently announced €7.2 billion of planned investments in chemical recycling by 2030 in Europe.

Throughout and beyond what hopefully will be the temporary crises of COVID and Ukraine, the world remains firmly focused on circularity, plastic pollution, and environmental leakage. “The circularity drive will spur innovation in chemical recycling, helping achieve world scale commercial viability which along with mechanical recycling will steadily displace virgin plastic resin,” says Wiesweg at IHS Markit.

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