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Europe’s Plastics Industry in a Sour Mood

Article-Europe’s Plastics Industry in a Sour Mood

OtmarW/iStock via Getty Images businessman massaging his forehead
A new survey from Plastics Information Europe shows no improvement in business performance in the first half of 2023, with less than a third of respondents expressing optimism for the second half of the year.

While no one would claim that the US plastics industry is booming, it looks a whole lot rosier compared with the outlook from across the pond. Market analyst Plastics Information Europe (PIE) just released its 10th market survey based on a poll of close to 200 plastics industry professionals across Europe. The opening sentence of PIE’s press release says it all: “Uncertainty, inflation, low demand — the signs are not good.”

Business headed in wrong direction

Europe’s plastics industry has been in the doldrums for more than three and a half years, notes PIE, and the mood remains gloomy. Almost half of the people surveyed said their companies did worse in the first half of 2023 than they did in the second half of 2022. A little over a quarter (28.7%) reported some improvement, while 25% said there was no change.

There were some geographical variances in those results. Interestingly, none of the surveyed companies in France, Spain, Portugal, the United Kingdom, or Ireland reported a deterioration in their business, according to PIE, while a majority of companies in Benelux, Central and Eastern Europe, and Italy reported a business downturn.

Slight hope for a rebound

There is a glimmer of hope, however, that better days lie ahead. Almost 30% of companies surveyed predict an “upward trend” in the second half of 2023. A majority of poll participants don’t expect change in either direction, while almost 22% expressed a pessimistic outlook for the remainder of the year. The most optimistic forecasts by geography hailed from Spain, Portugal, and Benelux.

Around 86% of companies polled said they have yet to fully rebound to pre-pandemic levels, with more than half saying they do not expect to reach that level of business until next year. “Almost 7% forecast that they will never reach that mark again, and more than 17% cannot even venture a guess,” noted PIE in the press release.

Image courtesy of Plastics Information Europesurvey question and results

The spike in energy prices, caused by Russia's invasion of Ukraine, was a primary concern for the plastics industry in 2022. In the first half of 2023, sales volumes, selling prices, and inflation kept executives up at night.

Other results worth noting from the survey include the following:

  • While almost half of survey participants said their companies’ short and medium-term investment plans remained unchanged in the first half of 2023, more than 31% admitted to cutting their budgets. 
  • A spike in the cost of energy, precipitated by the Russian invasion of Ukraine, is no longer top of mind for plastics processors in Europe, with low sales volumes being the primary concern for 70% of survey respondents, and 53% expressing concern about inflation.
  • In the resin markets, the poll revealed a shift toward spot purchasing and away from contracts, especially those with a timeframe longer than a year.
  • The business outlook is especially dire for recyclers, which is not surprising given falling prices for virgin resins and huge cost pressures, according to PIE. More than 70% of respondents associated with recycling said business decreased in the first half of 2023 compared with the second half of 2022. None of them reported an improvement.
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