Plastic Compounding Market Size, Share & Trends Analysis Report By Product (PE, PP, TPV, TPO, PVC, PS, PET, PBT, PA, PC, ABS), By Application (Automotive, Optical Media), By Region (APAC, Europe), And Segment Forecasts, 2021 - 2028

Report Overview

The global plastic compounding market size was valued at USD 61.4 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 5.5% 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 its various industrial applications due to benefits, such as easy molding and the ability to form the 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.

These include 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 second-largest regional market owing to the high product demand from the automotive sector, followed by electrical and electronics, and construction sectors. Germany was the leading plastic producer in Europe in 2020. The country is self-sufficient in plastic production with an adequate number of plants and production capacity required to fulfill the local demand.

Moreover, the country supplies Polyethylene Terephthalate (PET), Polyvinyl Chloride (PVC), and other products to neighboring countries due to the large production base. The country is also recycling a significant amount of waste plastic into various products, such as fibers, sheets, and films. 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 access to all the parts of the plastics industry value chain swiftly.

Future supply and demand changes are expected to keep prices of plastics very volatile. Most raw materials are produced through downstream processes of petrochemicals. Volatility in crude oil prices is mainly due to political instability, supply & demand imbalances, and seasonal variations. In addition, the market is highly integrated from raw material procurement to distribution channels. Major companies have established supply partnerships to reduce the overall production costs. Such factors are anticipated to have a major 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 the consumption of polymers derived from petrochemicals in different end-use industries are expected to further incentivize bio-based polymers production. Polymers derived through bio-based sources, such as Polylactic Acid (PLA), Polybutylene Succinate (PBS), and Polyhydroxyalkanoate (PHA), show remarkable biodegradability that their petrochemical-derived counterparts lack. These products are widely used in biomedical and agricultural applications.

Furthermore, the global COVID-19 pandemic has severely affected the manufacturing industries, which, in turn, is anticipated to limit the growth of the global plastic compounding market.

Product Insights

The Polypropylene (PP) segment led the market and accounted for a revenue share of more than 30% in 2020. The PP compounds are widely used in automotive applications owing to their high impact resistance and serviceability. The economic development in Asia and Latin America regions has propelled the growth of the automotive sector, both in terms of vehicle sales and domestic production. Considering the 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.

The material has good fatigue resistance and better chemical and temperature resistance. These factors have made PP a popular material for multiple applications across several global end-use sectors. Increasing construction spendings in Asia, Middle East, and Latin America are expected to provide growth opportunities to PVC compounds, considering the relatively lax regulatory intervention regarding the presence of plastics in building materials. The recent trend of developing PVC through bio-based sources will also support the segment growth.

For instance, the recently introduced Dow Chemical’s Ecolibrium plasticizer shall have a positive influence on PVC compounds demand over the forecast period. However, slow-down or halt in the manufacturing activities to contain the spread of coronavirus has led to a decline in the consumption of PP and negatively impacted its demand in various applications. Manufacturers are experiencing difficulties in running their production units owing to logistic restrictions and limitations on the movement of people, which are further cascading the impact on the product demand.

Application Insights

The automotive segment accounted for the highest revenue share of more than 25% in 2020. Increasing incorporation of plastics, as opposed to metals and alloys in automotive components, has been a major growth-driving factor for the segment. Over the recent past, there has been a considerable rise in automotive production, which is largely driven by the 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 next few years, thereby driving the product demand in the automotive application segment. However, the COVID-19 pandemic has immensely affected the production of automobiles and has caused disruptions across the value chain of the automotive industry. Slowdown or halt in manufacturing activities and decline in demand from consumers are expected to impact the demand for plastic compounds in the automotive application segment. The Asian markets have been registering an above-average industrial output over the recent past when compared to the Western regions.

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 product consumption in the industrial machinery segment over the forecast period.

Regional Insights

Asia Pacific was the dominant regional market in 2020 and accounted for over 44% of the global revenue share due to economic growth and the emergence of plastic manufacturers. The region will retain its leading position registering the fastest CAGR from 2021 to 2028. The growing manufacturing sector shall drive the product demand in the automotive, industrial machinery, construction, packaging, and electrical & electronics sectors in the region. It is the largest producer and consumer of automobiles, consumer goods, and packaging materials that paved the way for regional market growth.

Most of the producers are involved in roughly one of the segments of the plastics industry value chain. APAC is also one of the largest consumers and producers of electrical & electronic products, such as equipment and wires, which further fuels the regional product demand. Europe is likely to remain a saturated market with slightly positive aspects in Central & Eastern European countries.

Various federal-level and other agencies, such as the European Chemicals Agency (ECHA) and European Commission, have characterized stringent environmental regulations with regards to the production and consumption of the materials. These regulatory policies are expected to aid industrial development as they tend to push manufacturers to optimize processes and to develop sustainable technologies and products.

Key Companies & Market Share Insights

The global market is highly fragmented 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. For instance, in April 2020, Covestro donated 30,000 pieces of high-quality and ready-to-use Polycarbonate (PC) films for making high-quality face shields to Siriraj Piyamaharajkarun Hospital in Thailand. Some prominent players in the global plastic compounding market include:

• BASF SE

• LyondellBasell Industries N.V.

• Dow, Inc.

• DuPont

• RTP Company, Inc.

• S&E Specialty Polymers, LLC

• Covestro AG

• Kraton Polymers, Inc.

Plastic Compounding Market Report Scope

Segments Covered in the Report

This report forecasts revenue and volume growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2016 to 2028. 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 - 2028)

  • Polyethylene (PE)

  • Polypropylene (PP)

  • Thermoplastic Vulcanizates (TPV)

  • Thermoplastic Polyolefins (TPO)

  • Poly Vinyl Chloride (PVC)

  • Polystyrene (PS)

  • Polyethylene Terephthalate (PET)

  • Polybutylene Terephthalate (PBT)

  • Polyamide

  • Polycarbonate

  • Acrylonitrile Butadiene Styrene (ABS)

  • Others

• Application Outlook (Volume, Kilotons; Revenue, USD Million, 2016 - 2028)

  • Automotive

  • Building & Construction

  • Electrical & Electronics

  • Packaging

  • Consumer Goods

  • Industrial Machinery

  • Medical Devices

  • Optical Media

  • Others

• Regional Outlook (Volume, Kilotons; Revenue, USD Million, 2016 - 2028)

  • North America

    • U.S

    • Canada

    • Mexico

  • Europe

    • Germany

    • U.K.

    • France

    • Italy

    • The Netherlands

  • Asia Pacific

    • China

    • Japan

    • India

    • South Korea

  • Central and South America

    • Brazil

    • Argentina

  • Middle East & Africa

    • Saudi Arabia

    • South Africa