Locking arms and looking ahead

This is where prognoses become tricky. Ten years ago, it was predicted that the floodgates would open with a rush of polyethylene from the Arab region, but in the years following, the awaited deluge failed to materialise. Considering the false prophecies, some sceptics threw doubt on the influx of volumes expected from new “shale revolution” production plants in the US. Much like the rise in quantities coming from Arab states – which have in the meantime become a natural part of the market – the increase in US volumes will also not come as a swift invasion. That said, PE deliveries from the US to Europe are climbing month by month, tonne by tonne. In 2019, they grew noticeably – both on the trading market and in the numbers. The water has reached European ankles and will continue rising. Near the year’s end, another tidal wave was seen on the horizon, coming from a northeasterly direction over the Baltic Sea – Russian production is on the rise.

Talks between China and the US continued to dominate the headlines in 2019, with a couple of additional rounds of tariff escalation and impacts on the plastics supply chain. Bilateral trade between the world’s two largest economies has been contracting this year, and while Europe has been a bit more resilient to the US-China trade war compared to some regions, industry was moderately affected here. Mid-December could see Beijing putting additional tariffs on US products, which have already included a range of polymers, such as PE, PP, EPS, PVC and PU, in addition to plastic goods.

The EU’s latest deadline extension for the UK means uncertainty about the fallout from Brexit remains. At the same time, the global economy has been slowing its pace this year, dragged down by the prolonged trade policy uncertainties and automotive downturn. Nearing the Christmas holidays, economic recovery in 2020 seems a precarious idea.

For the automotive industry, this year might have been one of the toughest. Predictions were repeatedly squashed and hopes abandoned. Mid-year expectations had global sales of passenger cars shrinking 5%. The coming weeks will unveil whether this figure is to hold. The slump not only arrived in automotive heavyweight Germany, but it also gained ground. Losses, plant closures and job cuts have resulted at least since the middle of 2019, and carmakers such as Daimler are planning layoffs too. The Fiat Chrysler-PSA Peugeot Citroën merger can also be seen as two wounded warriors looking to be competitive again.

The car industry was under more intense public pressure too, such as the larger demonstrations during this year’s “IAA” auto show in Frankfurt / Germany. Greenpeace installed a giant black CO₂ balloon and monster truck at the heart of the venue, and climate protectors put heavy pressure on the German carmakers’ association, VDA. There are aftereffects for the international motor show. A new concept has to be created and preferably a new exhibition venue chosen. Along with Berlin and Frankfurt, Hamburg, Cologne, Stuttgart and Munich are contenders.

Disposable tableware, straws and cotton swabs made of plastics will be banned across the European Union as of 2021. Additionally, the single-use plastics directive formally adopted in May requires single-use plastic bottles to contain 25% recyclate by 2025, with at least a 30% recycled content being targeted for 2030. Industry associations have criticised the approach taken by Brussels and are demanding alternative solutions for the plastics litter crisis. The packaging tax proposed in Italy has met with unanimous opposition in the industry, while the plastic carrier bag ban in Germany is viewed as nothing but gesture politics.

Restrictions and bans on plastic items are gaining unprecedented popularity worldwide – the UN, however, was unable to reach a legally binding global treaty for plastics waste in March. Meanwhile, some successes in combatting problematic plastic packaging were recorded in the Ellen MacArthur Foundation’s “New Plastics Economy Global Commitment” progress report published in October.

Consumer goods giants such as Unilever, Nestlé and Procter & Gamble have made it a priority to reduce the use of virgin plastics, thereby lowering their CO₂ emissions. A lot of the initiatives currently making the rounds focus on using recyclate in the production of packaging. Plastics industry players, however, are working with the assumption that the CO₂ approach could in future be extended to other plastic products – either due to legislation or customer demand.

Against this backdrop, many polymer producers and processors have amped up commitments to recycling. This has led to an increase in acquisitions of recyclers as well as capacity expansions. Research projects, in particular for the chemical recycling of polyester, polystyrene and mixed plastics waste, also experienced heightened momentum. Various pilot plants that have come onstream or are in the works are meant to pave the way for a broader use or recycled materials.

Trade conflicts, Brexit, weak to negative growth rates in key customer sectors such as the automotive industry and not least the immense public pressure regarding the plastics waste crisis – the signs before the “K 2019” plastics industry trade fair could hardly have been worse. As a result, polymer producers and processors had some apprehension before the event in Düsseldorf.

None of their suspicions were confirmed in the end. Around 225,000 visitors attended K in October, a figure almost on par with the last edition in 2016. There were significantly more international attendees – especially from Asia – who were interested in visiting the stands of 3,333 companies. K gave the industry “courage in confusing times”, ran the headline of the official German-language daily newspaper K-AKTUELL (part of the KI Group) on the trade show’s last day.

We’ve almost reached the end of 2019, which was full of highlights and hurdles. We hope you’ve enjoyed reading PIE as much as we’ve enjoyed providing you with plastics information over the past 12 months. PIE’s editorial team researched and wrote over 1,500 articles for you in the past 51 weeks. Of these, there were more than 750 articles on companies, 220 market reports and 210 polymer price reports – from the automotive crisis to the ongoing US-China trade war and of course the world’s leading plastics trade fair “K 2019”. Accompanying all this were 310 graphs and countless photos as well as interviews and editorials.

This year, PIE introduced its first 2 surveys on business trends in the European plastics industry. PIE’s polymer price reports now cover more than 93 types of thermoplastics and thermosets, recycled plastics, reinforced materials and polyurethane. We will not forget the latest K, in which PIE’s sister publication “K-Profi” did an amazing job of covering the official German-language edition of the daily news over the 8 days at the trade show in October.

See you again in 2020, when it’s the year of the rat in the Chinese zodiac. From all of us in Bad Homburg, wishing you the very best for the Christmas season.

Your PIE team