Very few countries can claim to have had a successful year in 2015. Germany is one of the few lucky ones, and it was also comparatively smooth sailing in the US, Turkey and Mexico. A former high-flyer, Brazil, however, has fallen back, while China is paying the price of years of virtually unbridled economic growth and France's right-wing party has been unleashed on the country. In this article, Plasteurope.com takes a look at the plastics performance of a select number of countries.

The Latin American country remains stuck in a recession, as its economy continues to suffer the twin effects of low feedstock prices and the decline in demand from China. Against this backdrop, it is not exactly inspiring that the corruption scandal surrounding petrochemicals giant Petrobras continues to reverberate – in late November, a head of the ruling party was even arrested in connection with the affair. The picture becomes bleaker still when environmental catastrophes like the one in Minas Gerais are considered. A broken dam in an iron ore mine in 2015 unleashed a highly poisonous mudslide into the Rio Doce river, contaminating the surrounding area and the coastline at the river’s mouth.

The country’s plastics industry has not been spared from the general economic decline. After Brazil’s polyolefin consumption fell by 1% in 2014 to 4.1m t, demand is expected to contract further in 2015. In the first nine months of this year alone, consumption fell by 3% year-on-year to 3m t. An even more dramatic fall – down 11% to 829,000 t – was registered by PVC in the first nine months of 2015. It should come as no surprise therefore that “unfavourable market conditions” prompted styrenics producer Styrolution to indefinitely shelve its plans to install its own ABS production line in the country.

The Chinese New Year – the one of the goat – began on 19 February. Years that fall into this particular zodiac are said to be characterised by financial difficulties, requiring conservative approaches and cuts in expenditure. In fact, 2015 proved to be a year in which the People’s Republic turned increasingly inward, setting its own house in order. It was by no means a walk in the park for China’s plastics industry as the country came to the painful realisation that its miraculous economic growth of the past is simply no longer sustainable.

Speaking to Plasteurope.com on the sidelines of the 2015 “Chinaplas” industry fair in Guangzhou, Stanley Chu, chairman of fair organiser Adsale, said slower GDP growth, lower export growth, higher production costs and a strong RMB have become the new normal, adding that there is an urgent need for China’s industry to upgrade. Illustrative of the shift that occurred in 2015 is the fact that provinces that previously led economic growth, such as Zhejiang, Guangdong, Shandong and Liaoning, now post growth rates that fall short of the national average.

While the deceleration in growth certainly was the result of the overall macroeconomic situation, the government also stepped in at times. Nowhere was this more evident than in the recycling sector. Following the crackdown on illegal imports – the result of the so-called “Green Fence” policy – China rid itself of hundreds if not thousands of small-scale, mostly illegal recyclers and set up supervised reprocessing centres throughout the country. There were also persistent rumours that the government plans to cut down the number of state-owned conglomerates to 40. Although news about the potential merger of Sinopec and PetroChina made the rounds for quite some time, nothing concrete happened. It should be noted, however, that under the “Made-in-China 2025” initiative, state-owned enterprises are to be improved to prepare them to venture out into the international markets. With a new Five-Year Plan due to come into effect in 2016, consolidation could thus gather speed.

In other instances, the corrections made to the status quo were dictated by market realities. Some expansion plans made during the heydays of growth fell by the wayside, at times leading entire companies into bankruptcy. One of them was PTA producer Shaoxing Yuandong Petrochemical, which fell victim to the massive build-up in capacities for the polyester feedstock that far exceed domestic demand. Although many existing and planned chemical facilities in China are fed by coal, the slide in oil prices also did not leave the country untouched. After all, the widespread “coal-to-methanol” (CTM) or “methanol-to-olefins” (MTO) processes are only economically feasible if the price of oil stands at USD 75/bl or more. The future of many of these facilities currently on the drawing board is undecided, and already the government has announced its intention to cut down their number as part of the next Five-Year Plan.

Corruption also loomed large on the authorities’ agenda. After spectacular arrests early in the year of key managers at both PetroChina and Sinopec, the country was shook in August by a devastating blast in Tianjin’s free trade zone. The massive explosion exposed haphazard storage practices, with dangerous goods kept much too close to residential housing. The country was rocked by a number of other blasts in the wake of Teijin, prompting the authorities to make a renewed push towards improving industrial safety standards.

The lunar new year that will begin in February 2016 will usher in the Year of the Monkey. True to the nature of this particular animal, 2016 is expected to be largely unpredictable, although business is said to flourish, with unconventional solutions found to long-standing problems. While the ape’s influence will not be able to return the country to the days of yore, following the reorientation that took place this year, 2016 could mark the emergence of a new, more mature Chinese economy whose future development is guided by more realistic and at the same time more environmentally conscious plans.

The regional elections in France, from which the right-wing Front National emerged as the strongest party, cast a shadow over the multiple efforts undertaken in the country to bring its shaky plastics industry back on to more solid ground. While it seemed as though in 2015 recycling was for the first time considered as a viable means of unlocking a completely new feedstock source, the country’s national plastics associations agree that the current feedstock situation poses a serious threat to the competitiveness of the comparatively unpopular but painstakingly assembled redemption system. At the same time, plastics processors’ associations – which previously worked within set regional frameworks – have started banding closer together, in an effort aimed at lending their grievances more clout. A similar trend can be observed in the creation of the Lyon Polymer Science & Engineering R&D hub, in which the country’s petrochemical heavyweights plan to merge their research activities in order to keep up with international developments.

On the other hand, France’s economy is currently doing quite well. The post-2009 contractions have improved the country’s financial health, and thanks to the state’s help, several larger clusters, including in the automotive OEM sector, have emerged that are capable of competing on an international scale. By contrast, French automobile manufacturers continue to tread water. Several analyses that were made available during the “Midest” supplier fair held in Paris in November 2015 confirm the impression of an overall economic recovery, with a much lower number of insolvencies than in 2014. Preliminary figures indicate that most of the country’s supplier industries have raised their output, and production of technical plastics parts has reportedly even risen by 10.5%. However, if the Front National starts to meddle in these affairs, this nascent improvement could easily be nipped in the bud.

Throughout the sweeping changes in the supplier landscape that took place this year, Germany’s plastics processing industry remained a bulwark of strength and stability. The country’s medium-sized companies can be counted on to defend its position as a European leader, and in the global rankings, too, Germany’s plastics industry continues to hold a high spot. The country’s plastics packagers were able to easily overcome the feedstock crisis that hit in the spring, mostly thanks to the fact that index clauses had already been adjusted in 2011 in response to the change in feedstock cycles that took place at the time. The conclusion to be drawn from the current reality, Roland Roth, president of Germany's plastics packaging industry association Industrievereinigung Kunststoffverpackungen (IK) told PIE, is “to thoroughly analyse and assess the behaviour of their raw material suppliers this spring with regard to delivery commitments, reliability and pricing. And – most importantly – they need to draw the necessary consequences when placing future orders.” A more intensive search for potential alternative materials is another option, Roth advised, adding that it is high time that the higher plastic import duties imposed by the EU in January 2014 be scrapped.

The overall production value achieved by Germany’s plastics processing segment in the first nine months of 2015 was almost the same as during the same period of the preceding year, despite the significant fall in Q1. This is true not only for products made of plastics but also for semi-finished goods, including film, sheet and pipe. The latter especially had suffered from the polyolefin bottlenecks experienced in spring. Sales in both segments are just minimally below those of the preceding year, so that it is possible to say the sector is holding stable at a record level.

Although the production of technical parts and consumer goods remained largely aloof from the polyolefin crisis experienced in spring, these two areas nevertheless posted the smallest sales levels within the sector. The trend here, however, is also definitely on the up. Even though the scandal surrounding Volkswagen did serve as an irritation to the automotive industry, over the course of the past few weeks the noise has died down somewhat, and the impact of the scandal appears limited. While numerous suppliers have adopted rather conservative future plans, they will nevertheless manage to make ends meet.

All grand announcements notwithstanding, it will take years before the West will once again be able to conduct larger-scale business activities with Iran. One of the reasons is the fact that most of the country’s production plants have been adjusted to meeting the demand of its own 78m inhabitants, with relatively little volumes assigned for export. At the same time, Iran is home to many cheap feedstock sources, comparable to those of Saudi Arabia and the US. The latest estimates peg the country as home to the world’s largest gas deposits and the third-largest oil reserves. Iran’s petrochemical plants are said to have overall capacity for about 60m t/y.

Ahmad Mahdavi Abhari, secretary-general of the country’s petrochemical industry association, expects direct foreign investment in the country to reach USD 70 bn some of which will go towards the mega-refinery site in Chabahar, in the country’s south, which will shorten the transportation route to Asia. If this amount is really forthcoming, it will be equal to half the money currently being sunk into the US shale gas boom.

This makes the country a sleeping giant, but one whose movements are very difficult to predict. Iranians are not known for the speed at which they make decisions, and projects tend to take a long time to be realised. In the long term, however, it will be impossible for the world not to engage with the country. Now that the sanctions have ended, Iran has a lot of catching up to do. The country’s GDP, for instance, currently stands at just USD 415 bn. By comparison, that of Germany – whose population level is about the same – is nine times as high.

Italy’s economy has started to recover. After three years of decline, experts anticipate that the country will see growth of 0.8-0.9% in 2015. Although the unemployment rate remains high, consumer spending in Europe’s third largest economy is also slowly rising. The uptrend has impacted the country’s plastics industry as well. Nowhere is this better illustrated than by Versalis’ cracker in Porto Marghera, which many had proclaimed dead, but which in 2015 made a miraculous comeback and is once again up and running. What’s more, plans call for a complete modernisation of the site next year. Another weeble that wobbles but does not fall down is Sandretto. The Italian injection moulding machinery maker, whose demise seemed practically given in 2013 after years of existential battles, recently made a comeback by entering the market for 3D printers.

Traditionally a strong economic force, Italy’s plastics machinery segment has adopted a particularly optimistic future outlook, which according to industry association Assocomaplast is based on rising exports and ongoing consolidations. In 2015, extrusion specialist Amut acquired its Lombardy-based competitor Dolci Bielloni and Venetian peripheral goods supplier Piovan purchased Ferrara-based silo builder Penta. While US plastics machinery giant Milacron moved its blow moulding machinery operations from Italy to the Czech Republic, another American player, Barnes Group, in 2015 purchased local hot runner specialist Thermoplay.

The field of biopolymers, another hobby horse of the Italian plastics industry, also continued to make strides in 2015. Milano-based GFBiochemicals began commercial production of levulinic acid, a key feedstock for unsaturated polyester resins, polyester polyols, non-phthalate plasticisers and diphenylamine. Also in 2015, Bio-On started construction of Italy’s first PHA plant. The death of entrepreneur Guido Ghisolfi – a strong supporter of for the country’s bio-polyester activities – cast a sad shadow over this particular field in early March.

There hardly is a country that is mentioned as frequently in company news right now as Mexico – that is, if the company in question is active in the automotive segment. Investments from all over the world are flowing into the country, which would like to establish its economic independence but is still considered a source of cheap labour and easy access to the US. Whatever OEMs in the country itself, in the US and in other nearby states need, Mexico can provide it – from injection moulded parts to interior components or wiring systems. International automotive giants with their own plants in the country include Volkswagen, Chrysler, Ford, General Motors, Honda, Nissan-Renault and Mazda. Other companies like Audi, Kia as well as the cooperative plant operated by Renault, Nissan and Daimler will commence local production in 2016 and 2017/18 respectively. BMW is set to follow one year later.

The country’s automotive trade balance is expected to post a surplus of about USD 55 bn this year, up 10.8% over 2014. Demand for Mexican goods is driven by automotive players from the US and Europe, the two most important end markets for the Central American country, which holds fourth spot among the world’s leading automotive exporting countries. So far investments in the sector have trailed developments, but are starting to pick up, and massively so.

The country is now attempting to apply its automotive industry’s recipe for success to the aviation segment. By 2020 Mexico’s government intends to more than double the current number of 43,000 employees active in this particular field in the state of Querétaro alone.

With a stable GDP growth of about 3.5%, Poland will probably remain in the top leagues of Europe’s economies. The country’s solid financial footing has motivated a number of companies to make rising investments across several end markets, and has also spurred consumer activity. The reforms announced by the new Polish government could intensify this trend, reports Germany Trade and Invest (gtai). With a 25% share in imports, German companies especially stand to benefit. The neighbouring country remains Poland’s largest supplier, followed by China, although the latter’s investment in Poland remains relatively small.

Whereas for many years Poland seemed exempt from the skills shortage that dogged so many other European countries, companies are increasingly reporting difficulties in filling positions. The government is trying to counter this trend, including by a programme geared at developing vocational education. In addition to that, 2015 was also a year of rising environmental efforts, with EU requirements the main driver behind higher investment in both recycling and environmental technology. As a result, the salary gap towards western Europe is expected to narrow even further.

Poland’s plastics consumption exceeds 3m t, making it Europe’s sixth largest polymer consumer, accounting for 7% of the region’s total demand, and ranked behind Germany, Italy, France, the UK and Spain. Despite several planned or recently completed capacity upgrades, the country’s domestic petrochemical industry – which currently has capacity to turn out 1.7m t/y of polymer – is unable to keep up with domestic demand. The resulting gap is happily filled by foreign suppliers. On the application front, the flexible packaging segment continues to perform particularly well. Following an increase of 5%, this market is growing at a rate exceeding that of the EU average. The automotive and household goods segments also continue to grow, with a lot of investment coming from fellow EU member states.

Overshadowing almost everything in Russia in 2015, whether plastics-related or otherwise, was the stifling macro-economic environment – itself the result of international sanctions, the Ukraine crisis and the rouble’s volatility. As the year wore on, it became increasingly difficult to find words to describe how desperate the situation had become for Russian plastics processors. With little information publicly available, market observers can only rely on polymer price information to draw the conclusion that the extremely high level of the latter will likely have driven more than one local processor into financial ruin.

At the onset of the year it certainly did not look like the situation would become as dire as it did, although it remains unclear what became of the grand investment plans touted in January, including Kuibyshevazot’s announcement to upgrade its caprolactam plant to the tune of EUR 82m. By February, however, it became clear that the country was stuck in a rut. Petrochemicals giant Sibur alluded to the problem when it laid the foundation stone for its ZapSibNeftekhim polyolefin hub in Tyumen, western Siberia, saying that the final cost and start-up date remained unclear as a result of economic uncertainty. In April, Mexico’s Alpek decided to pull the plug on its proposed PTA and PET joint ventures in the country, citing shareholder interest. An exception to the generally glum picture was the news that Lukoil subsidiary Stavrolen resumed operations after an outage of more than a year.

Not surprisingly, the dire situation at home, coupled with a marked cooldown in relations with the West, prompted many local players to set their sights abroad. Oil group Rosneft struck on two fronts. In mid-year the company bought up a large amount of shares in German refinery hubs, thereby ensuring it has a taker for its oil. But the strategically interesting development was its rapprochement with China, formalised in writing in the autumn, when the group acquired a 30% stake in China National Chemical Corporation. The warm relations with the People’s Republic also found expression in Sinopec’s decision to acquire an undisclosed stake in Sibur at around the same time.

Looking ahead towards 2016, there is no end in sight yet to the plight of Russia’s plastics processing industry. The economic environment is unfavourable to new projects and the exchange rate remains volatile. With political relations with the West increasingly sour, the country’s movers and shakers could intensify their efforts to seek alliances elsewhere, including with China.

Spain’s economy is booming, and the economic crisis appears to have been overcome. The country now belongs to Europe’s strongest growing economies, with GDP growth expected to reach 2.5% this year. The EU’s fourth largest economy is benefiting from the recent rise in consumer confidence and the lax monetary policies of the European Central Bank. And the prospects are no dimmer headed into 2016. Spain’s finance minister Luis de Guindos believes the country can surpass the expected growth of 3% in 2016, even if high unemployment rates continue to present a burden.

All good news notwithstanding, the country’s economy still faces the very real threat of a secession of the important Catalonia region. Even though the separatists failed to achieve the required 50% quota in the regional elections held in late September, Catalonia’s parliament in November passed a resolution in favour of independence. The document outlines the region’s plans to split off from the rest of Spain in the coming 18 months. The central government in Madrid, meanwhile, has announced its intention to take legal steps to prevent a potential secession.

A split would have serious repercussions for the country’s plastics industry. Home to 7.5m inhabitants, Catalonia is also the region where about one-third of Spain’s total plastics and rubber processing industry is located. The country’s two largest crackers are situated here, including the relevant downstream lines for PE, PP, PVC, PS, PET and PA.

In addition to the turbulence caused by the polymer crisis, the Swiss franc’s decoupling from the euro confronted the country’s mostly export-oriented plastics industry with an entirely new set of challenges. After the franc’s value was significantly raised in January, the price of Swiss-made products rose dramatically, impairing producers’ ability to compete in the international realm. Plastics processors differed in their response to the new situation. While some placed their bets on a more protective strategy aimed at balancing out the currency effect, others tried to raise efficiency by means of restructuring, salary cuts or longer working hours. The situation improved somewhat in the second half of the year, and local pipe producer Georg Fischer has already announced that it will return to its previous working week schedule in the new year.

After significant growth averaging 4.7% per annum over the course of the last few years, Turkey’s economy has cooled its heels somewhat. Expectations are that growth will reach about 3.6% each year in the period from 2014 to 2016. The country is suffering from the insecurity related to its internal and external political situation as a place where Orient meets Occident as well as the Turkish lira’s value loss. Output of the country’s plastics industry is growing at a rather slow pace at the moment, and the high dependency on foreign feedstock remains a painful burden. There is some light at the end of the tunnel, with former state-run Petkim planning to build several large-scale petrochemical plants near Izmir, although construction works are only expected to be completed in 2018.

In volume terms, the output of Turkey’s plastics processing industry grew by just 1.4% year-on-year in H1 2015, with expectations that growth will reach 3.4% for the year as a whole. Exports of plastics products fell by 12.7% in the first half of this year to USD 2.54 bn, while the average capacity utilisation rates of Turkish plastics companies stood at 72% during the same period. In mid-year, construction began at several processing companies to be located in the first organised plastics special industrial zone near Izmir.

Plastics companies from across the Eurozone also remain active in the country. In June, German manufacturer of technical parts for the household goods industry Wirthwein acquired a majority stake in local producer Farel Plastik. In the packaging segment, Greiner in 2015 purchased a controlling interest in Teknik Plastik, thereby taking a first step towards the Middle Eastern markets. Early in the year, Mauser commenced IBC production at Gebze, and Schütz’s expanded licensing deal with Deren Ambalaj in Istanbul also strengthened the IBC production network in the region. Luxembourg-headquartered insulation manufacturer Armacell acquired Istanbul-based OneFlex and, eager to partake in Turkey’s automotive boom, French automotive OEM Plastivaloire purchased injection moulder Otosima.

After a rather sombre start to the year, with a poll carried out by the British Plastics Federation (BPF) showing that the number of companies that expected their profitability to increase had fallen to a low not seen since January 2013, business confidence in the UK plastics industry continued to improve, and by mid-year many companies had lifted their expectations for sales and investments.

The more upbeat attitude notwithstanding, feathers were definitely ruffled in 2015, and the UK plastics recycling industry felt the brunt of it. The low oil price was partially to blame – the resulting fall in virgin material notations made plastics recycling increasingly uncompetitive. The pressure proved too much to bear for milk bottle recycler Euro Closed Loop Recycling. Even a new owner was unable to prevent the company from laying off staff and reducing working hours. Despite a reshuffle in the regrinding industry – in mid-year Regain Polymers was purchased by investor Aurelius – recycling rates continued to rise in the UK. These gains notwithstanding, players warned that the UK could fall short of meeting its 2017 recycling target. To prevent that from happening, the main stakeholders in mid-year set up the Plastics Industry Recycling Action Plan (PIRAP). Another environment-related step taken in 2015 was England's decision to impose a plastic bag charge. The last member of the UK to do so, the law went into effect on 1 October.

There was also a lot of news much farther up the value chain, on the feedstock front. While shale gas and hydraulic fracturing (fracking) remain a no-go area in many European countries, the UK this year pressed ahead, passing a number of new laws and moratoriums, and awarding exploration licenses both on- and offshore. The topic of shale exploration cannot be discussed without mentioning Ineos. The company, whose roots are in the UK, and its outspoken chairman Jim Ratcliffe are key drivers in the push for fracking in the UK. In 2015 Ineos joined the top three UK shale gas exploration companies, and is now hot on the heels of French petrochemicals giant Total. After beginning the year with townhall meetings, Ineos proceeded to buy stakes in onshore licenses, including the ones surrounding its cracker in Grangemouth, Scotland – which is capable of being fed by ethane imports from the US. From H2 onwards, the company’s focus shifted towards offshore gas fields, where it acquired a lot of assets in the North Sea in particular.

Although all these developments make the UK a front runner for shale gas exploration in Europe, the issue continues to split the country. While the central government in August implemented a “fast-track” to fracking applications that bypasses local decision-making if councils fail to respond to a bid within 16 weeks, in October Scotland’s regional government extended its shale gas moratorium for another two years, thereby significantly limiting any exploration projects. The latter move deals a particularly striking blow to Ineos, whose Grangemouth facility is located in Scotland and where it owns several onshore exploration licenses.

Looking ahead towards 2016, the issues that dominated the agenda this year will likely remain. It will be particularly interesting to see which turn the fracking debate will take, and whether the UK will end up serving as an example for the rest of Europe. Once Grangemouth starts receiving ethane from the US – most likely at some point in H2 2016 – the deck will anyhow be reshuffled. If the existing trend persists, the country’s processors can continue being “cautiously optimistic” about the future.

The revival caused by the shale boom in the US is increasingly impacting the country’s plastics processing segment, too. Although it will likely take until 2017 for cheap feedstock to appear, the very low energy costs and positive future prospects are prompting the first investment preparations. Against this backdrop, it came as no surprise that the triannual lead fair, "NPE", saw new records in both visitor and exhibitor numbers. The low point experienced in Chicago in 2009 has been overcome, and at this year’s NPE many more US processors could be seen than during the previous edition in 2012.

Meanwhile, the port in Houston is bursting at the seams. A key cargo handling hub, the port’s activities have risen by 20% year-on-year mostly as a result of the numerous plant-building projects in the country. The port authorities are now expanding the site, with a specific view towards creating new storage spaces for future resin exports. There are reports of similar expansion projects in New Orleans, and in Philadelphia, too, preparations for the processing and export of gas from the Marcellus reserve in Pennsylvania are advancing at a rapid speed. In fact, the first ethane-filled tankers are already headed towards Europe, bringing feedstock to the latter’s crackers.

Although orders for plastics machinery remained stable at the level of the previous year until the end of Q3 2015, it should be remembered that 2014 saw a massive rise in orders. Sales of investment goods for the plastics processing segment stand about 20-25% above the level of the early 2000s for the second year in a row. These developments further underline that there is only one way in which the US plastics industry is headed in the future, and that is up.