Anyone who visited the mid-May dual trade fair of Kuteno and KPA in Bad Salzuflen, Germany, would have had the impression that the German plastics industry has been very successful in one thing – ignoring emerging problems. It is as if it took some time until, after the past crises, there was widespread acceptance of the “new normal” of a depressed economic situation. Now, however, following production cutbacks and staff-reduction measures, things have settled down at a low level in a new comfort zone. Yet, the next crisis is on the horizon – if converters’ requirements increase to a major extent again, supply gaps are on the cards. 

The Kuteno/KPA event was thus characterised less by business activity and more by tranquillity and a homely atmosphere. In the morning, free of charge, there were pretzels and bread rolls, at lunch time, a warm meal, and later some cake – and that was for everyone attending the trade fairs. As the day drew to an end, a drinks waggon travelled through the hall to bring the exhibitors a beer – something that was made easier by the fact that the aisles emptied very quickly in the afternoon. The visitors – 4,740 on the three days of the fair – had evidently brought their business discussions to an end fairly quickly. The fact that there was always someone available to talk to on the mostly small exhibition booths was a further indication of the limited dynamism that is currently dominating the market. 

After all, the majority of players in the industry have already ticked off the current year. As far as demand goes, no one presumably expects significant revival before the end of this year. The summer holidays are coming up and, before the year comes to an end, there is only autumn left to provide impulses, if any. Also, macro-economically, there are more obstacles than incentives – the ambiguity surrounding US tariffs and counter-tariffs is unsettling the markets, and uncertainty is poison for investment. To reflect this, the German government lowered its GDP forecast for 2025 in April and now expects zero growth instead of a minimal increase. 

But what happens if the wind changes direction again? What happens if plastics become more in demand again – in 2026 or perhaps 2027? Even if demand is unlikely to reach previous levels again, the European plastics industry would be caught on the wrong foot. A number of production lines – perhaps too many – are facing closure or have already been shuttered. How successfully imports from the US, Middle East, and Asia can fill these foreseeable gaps is questionable in view of the fluctuating freight rates, volatile exchange rates, and inconsistent willingness of producers from overseas to export their products. Like the race to catch up after the pandemic in 2021, and during the raw-material crisis of 2015, feedstock prices will explode and bring about massive supply bottlenecks. Medium-sized converters in particular will not be able to get hold of enough material to keep production running at full speed – or they will simply not be able to afford it. 

Problems of this kind are looming for glass fibres, for example, and are also conceivable for styrenics. The closure of plants in Böhlen and Maasvlakte in the past year and a half wiped nearly 1 mn t/y from the market and thus around a fifth of the European capacity for the key feedstock, styrene. 

Also moving in this direction is the widespread closure of the old, no-longer-competitive crackers in Germany (Böhlen), France (Gravenchon), UK (Wilton), Belgium (Antwerp), the Netherlands (Geleen) and probably also Italy (Priolo and Brindisi are hanging in the balance), with virtually no new projects to compensate. At present, the only one is Project One from Ineos in Antwerp, after Orlen put its planned new construction in Plock, Poland, on ice because of increased costs.

The situation was summed up by Maximilian Nichterlein, economic spokesman of Plastics Europe Deutschland: “The European percentage of global plastics production has halved in less than 15 years to 12%. It would not be possible to fill this gap even with major efforts to expand plastics recycling.”

Andrew Cole,

Editor, KI Group