09 June 2015
09 June 2015
AMI Consulting has just published a new report on the latest developments in the polymer distribution market in Europe.
The report states:
In 2014, more than 12% of polymer consumed in Europe was sold via distribution channels which are equal to around 3.4 million tonnes. After hitting its lowest point in 2009 during the great recession and with another slowdown in 2012 due to weak polymer demand affected by the eurozone crisis, distributors' sales grew at an average of over 3%/year in 2013 and 2014 and for the first time in seven years surpassed the volume of sales reached in 2007.
The market has been driven by the ongoing rationalisation by polymer suppliers of their customer base and increasing the threshold at which they handover customers to distributors. Distributors have also been securing more distribution mandates with non-European suppliers, causing traders to lose market share. In response some traders have started to establish distribution relationships with their suppliers. Plastics processors are also increasingly relying on distributors rather than holding their own stocks.
The important role distributors play in the supply chain has been well illustrated by recent market developments. Falling oil prices in the last quarter of 2014 and weakening demand led to rapid destocking by processors. The weak euro saw imports decline as importers diverted material to dollar paying economies where they could earn better netbacks. European producers also increased their exporting activities for similar reasons. As a result, from the beginning of 2015, both processors and distributors were caught by surprise by extreme raw material shortages exacerbated by an unexpected string of force majeure just at a time when spring buying was kicking in. The tight market has caused prices to rebound strongly and the ensuing shortages has led some processors shutting down lines and industry trade associations lobbying hard in the press for producers to invest in new European production.
It is in difficult and tight market situations such as these when the distributors' skilful, flexible and rapid relief offered to troubled customers is well rewarded and increasingly it is distributors who are expected to be the ones who will offset the sudden changes in the polymer supply/demand balance for both suppliers and plastics processors.
During 2014-2015 the distribution sector was buzzing with acquisitions and further consolidation is expected to continue over the next five years as companies seek new geographies, end markets or distribution mandates which in a mature market such as Europe are a challenge to achieve. Several well established European players have been losing market share to much younger but dynamic players who have been advancing strongly particularly in the area of engineering polymers.
Further to this, the report claims that over the next five years, the European distribution market is expected to advance at a double the rate of polymer demand encouraged by improved confidence in the market, processors re-launching some of the investments previously postponed due to the downturn, Central and East European polymer producers directing increasing volumes via distribution channels, and distributors increasingly switching to the faster growing and higher value engineering thermoplastics and niche markets such as medical/pharmaceutical, personal care and the automotive sectors.
The full report is available from AMI Consulting here - http://www.amiplastics.com/cons/prod.aspx?catalog=Consulting&product=M189
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