Over $1.5 Billion Planned Investment in European Plastics Sector in 2007

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Researched by Industrial Info Resources (Sugar Land, Texas). Europe is slowly creeping back into the plastic production sector after the past year and a half of lying low, in terms of capital investments. It seems the European plastics industry is witnessing a resurgence in capacity additions and expansions for one of the most popular commodities on the world market. As construction booms globally, the auto industry flourishes by making headway into new markets, and more gadgets are produced for our business and enjoyment, the production of plastics will increase. If the demand is there, the suppliers will want to take full advantage of the market opportunities.

Since August 2006, Industrial Info has identified $1.6 billion worth of planned plastic-related projects in Europe expected to begin construction in 2007. All the projects will take place at existing sites and range from unit additions to expansions to debottlenecks. With the industrial growth in Asia not showing any signs of letting up, Europe certainly does not want to be left behind waiting for another dark age (economically speaking) to begin. Europe must stay competitive in investments and production against more and more global regions that are increasing production of plastics, need for imported plastics, and new capacities in regions where none had existed prior.

The largest of the projects is one proposed by Waker-Chemie GmbH (Munich, Germany) at its existing site in Burhausen. The polysilicone unit expansion will cost approximately $375 million to increase the production capacity by 1,000 metric tons a year. The smallest of the planned capital investments is also in Germany and is being developed by Basell N V (Wesseling, Germany). This mere $50 million investment at its existing plant in Wesseling will involve adding a new polyethylene swing unit that will produce 100,000 metric tons a year of high-density polyethylene and/or low-density polyethylene. This unit is replacing an existing antiquated unit at the site. (See related September 18, 2006, news article - Over $900 Million in CPI Projects Expected to Begin Construction in Germany in 2007

As the world interconnects its markets more and more, the impact of capacities and pricing begin to affect the market as a whole and not just a region anymore. For example: If Japan has difficulty in supplying Australia with product, then Thailand or Vietnam, two countries that are growing their economies, along with plastic production, will be able to step up and offer the same product, although there might be a price adjustment. Twenty years ago, Vietnam would not have even been an option for Australia to trade with. The needed capacities just didn’t exist much less the hostile political atmosphere at the time following the Vietnam War. So this global situation has caused Europe to consciously take inventory and plan ahead for the growing plastics market. Because this is one sector that truly impacts everyone from big business in London and Stockholm down to the boy flying a kite in an unknown field in Papua New Guinea.

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