The global plastic compounding market size was estimated at USD 59.10 billion in 2019 and is expected to register a CAGR of 6.5% over the forecast period. Increasing substitution for glass, metals, wood, natural rubber, and man-made materials, such as concrete, is anticipated to drive the growth. The demand for plastic is rising owing to the various industrial applications due to its versatile benefits, easy molding, and ability to form desired shape.
Plastic compounding involves an elaborate process with various stages such as determining additives ratio, high speed mixing via twin screw extruders, melt mixing, and cooling, before final pellet cutting and packaging. There is a diverse range of products available, depending on the additives and fillers integrated while processing the polymers including antioxidants, processing aids, colorants, wear-resistant, blowing agents, lubricants, fillers and reinforcements, antistatic agents, slip/anti-slip agents, anti-block agents, flame retardants, light stabilizers, impact modifiers, and cross linking agents.
Europe is the third largest market owing to the high demand from automotive followed by electrical and electronics and construction sectors. Germany was the leading plastic manufacturer in Europe in 2018. The country is self-sufficient in plastic production with adequate number of plants and production capacity required to fulfill local demand. Moreover, the country supplies Polyethylene Terephthalate (PET), Polyvinyl Chloride (PVC), and other products to neighboring countries due to high quality and large production base. The country is also recycling a significant amount of waste plastic into various products, such as fibers, sheet, and film. Germany is setting the international standards as a key plastic industry located in Europe, with the country’s leading edge network of chemical parks, industrial infrastructure, and unique cluster concept, providing industry players for accessing all the parts of plastic industry value chain swiftly.
Future supply and demand changes are also expected to keep prices of plastics very volatile. Most raw materials are produced through downstream processes of petrochemicals. Volatility in crude oil prices is due to political instability, supply and demand imbalances, and seasonal variations. Additionally, the market is highly integrated from raw material procurement to distribution channels. Major companies have established supply partnerships to reduce overall production costs. Such factors are anticipated to have a large impact on the prices of plastic compounding.
The depleting crude oil reserves and environmental concerns due to the usage of petrochemical polymers have propelled the demand for bio-based products. Government restrictions on consumption of polymers derived from petrochemicals in different end use industries is expected to further incentivize bio-based polymers production. Polymers derived through bio-based sources such as Polylactic Acid (PLA), Polybutylene Succinate (PBS), and Polyhydroxyalanote (PHA) show remarkable biodegradability that their petrochemical-derived counterparts lack. These products are widely being accepted in biomedical and agricultural application.
Polypropylene (PP) held the largest volume share of the plastic compounding market in 2018. Its compounds are largely used in automotive applications owing to the high impact resistance and serviceability. Economic growth in Asian and Latin American markets has propelled growth in automotive sector both in terms of vehicle sales and domestic production. Considering ever increasing automotive production along with regulatory trends compelling manufacturers to reduce vehicular weight and improve fuel efficiency; plastics consumption in automotive applications shall rise considerably over the forecast period. It has good fatigue resistance and better chemical and temperature resistance. These factors have made PP a popular material for multiple applications in developed economies and emerging economies alike.
Increasing construction spending in Asia, Middle East, and Latin America is expected to provide growth opportunities for PVC compounds considering relatively lax regulatory intervention regarding the presence of plastics in building materials. Recent trend of developing PVC through bio-based sources have been successful, such as the recently introduced Dow Chemical’s Ecolibrium plasticizer, shall have a positive influence on PVC compounds growth over the forecast period.
Automotive is anticipated to lead the application segment over the forecast period. Increasing incorporation of plastics as opposed to metals and alloys in automotive components has been a major factor for the segment growth. Over the recent past, there has been a considerable rise in automotive production, which is largely driven by growth of the industry and manufacturing landscape of emerging markets. China, India, and Brazil are the fastest growing economies and are also the major production hubs for automobiles. This trend is expected to continue over the future, thus driving demand for compounded plastics.
Asian markets have been registering an above average industrial output over the recent past when compared to their Western counterparts. Companies based in the western markets are gradually increasing their presence in Asia to capitalize on growth prospects. Also, a favorable environment in Asia that promotes small scale enterprises to develop and government driven tax incentives for foreign corporations are expected to increase sales of industrial machinery and equipment. Companies manufacturing these machineries tend to channel their businesses locally, i.e., establishing manufacturing units closer to their customer bases. These factors are likely to increase consumption of plastic compounds in industrial machinery over the forecast period.
Asia Pacific (APAC) emerged as the largest region in 2018 favored by economic environment and emergence of plastic manufacturers. Growing manufacturing sector shall drive the demand from automotive, industrial machinery, construction, packaging, and electrical and electronics industries in the region. It is the largest producer and consumer of automobiles, consumer goods, and packaging materials that paved a way for the regional market growth. Most of the producers are involved in roughly one of the segments of the plastic industry value chain. APAC is also one of the largest consumer and producer of electrical and electronic products, such as equipment and wires among others, which further fuel the regional demand.
On the other hand, Europe is likely to remain a saturated market with slightly positive aspects in Central and Eastern European countries. Various federal level agencies and others such as the European Chemicals Agency (ECHA), European Commission have characterized stringent environmental regulations in Europe with regards to production and consumption of the materials. These regulatory policies however challenging might they be for growth, are in a way expected to aid industrial development as they tend to push manufacturers to optimize processes and to develop sustainable technologies and products.
The global market is highly fragmented in nature with over 60% share occupied by Small and Medium Enterprises (SMEs). Companies are rapidly expanding their production capabilities to consolidate their market position. The industry has witnessed significant capacity expansions in China with the emergence of standalone independent compounders. Unlike major end-use corporations such as automotive manufacturers and Original Equipment Manufacturers (OEMs) who establish strategic agreements with compounders or extend their capabilities towards compounding, Chinese compounders cater to a large pool of medium enterprises.
Some of the key market participants are BASF SE, LyondellBasell Industries, N.V., and The Dow Chemical Company. The other manufacturers are SABIC, Asahi Kasei Plastics, and Covestro (Bayer Material Science) and others.
Base year for estimation
Actual estimates/Historical data
2016 - 2018
2020 - 2027
Volume in Kilotons, Revenue in USD Million & CAGR from 2020 to 2027
North America, Europe, Asia Pacific, Central & South America, and Middle East & Africa
U.S., Canada, Mexico, U.K., Germany, France, Italy, Netherlands, China, India, Japan, South Korea, Brazil, Argentina, Saudi Arabia, and South Africa
Revenue forecast, competitive landscape, growth factors and trends
15% free customization scope (equivalent to 5 analyst working days)
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This report forecasts revenue growth at global, regional, and country level and provides an analysis of the latest industry trends in each of the sub-segments from 2016 to 2027. For the purpose of this study, Grand View Research has segmented the global plastic compounding market report on the basis of product, application, and region:
Product Outlook (Volume, Kilotons; Revenue, USD Million, 2016 - 2027)
Thermoplastic Vulcanizates (TPV)
Thermoplastic Polyolefins (TPO)
Poly Vinyl Chloride (PVC)
Polybutylene Terephthalate (PBT)
Acrylonitrile Butadiene Styrene (ABS)
Application Outlook (Volume, Kilotons; Revenue, USD Million, 2016 - 2027)
Building & Construction
Electrical & Electronics
Regional Outlook (Volume, Kilotons; Revenue, USD Million, 2016 - 2027)
Central & South America
Middle East & Africa
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Increasing the production of personal protective equipment and medical devices to combat the COVID-19 is anticipated to impact the plastic compounding activities across the globe positively. For instance, in March 2020, Clariant has introduced a new family of ABS compounds formulated specifically for pharmaceutical packaging and medical device applications. The updated report will account for COVID-19 as a key market contributor.