European plastics makers shut plants as production declines sharply

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European plastics producers are closing crops amid a deep decline in manufacturing as EU corporations wrestle to compete with a worldwide glut of low-cost materials.

Plastic manufacturing in Europe declined 8.3 per cent in 2023, in response to figures printed by Plastics Europe, the trade physique, on Monday. Mechanical plastics recycling — the commonest type of plastic recycling in Europe — has additionally declined for the primary time since 2018 due to a drop in demand, Plastics Europe mentioned.

The drop was deeper than anticipated, mentioned Virginia Janssens, managing director of Plastics Europe, including to considerations amongst energy-intensive industries about “deindustrialisation in Europe” resulting in a heavier reliance on “much less sustainable imports”. Germany is the continent’s largest plastics producer.

The autumn in Europe contrasts with a 3.4 per cent enhance globally as nations together with China and the US scale up plastics manufacturing. China was liable for 60 per cent of petrochemical capability will increase in 2023, in response to information supplier S&P International.

The European plastic trade’s share of the worldwide market has declined from 28 per cent in 2006 to 12 per cent final yr, the info confirmed.

Formidable local weather targets set throughout the European Fee’s earlier time period, which ended with EU-wide elections in June this yr, have spawned a wave of regulation that corporations have complained is strangling development.

In a report on European competitiveness printed in September, former European Central Financial institution president Mario Draghi attributed a lot of the blame for the EU’s flagging financial development to excessive power costs, “restrictive” regulations and decrease price manufacturing overseas.

The glut of virgin plastic outdoors Europe has additionally undermined the enterprise case for recycled materials.

Final month Plastics Recyclers Europe, an trade physique, mentioned that the “downward development within the European plastics recycling market is alarming” and was “driving many recycling corporations out of enterprise”.

Firms together with power main ExxonMobil and chemical substances firm Sabic have mentioned this yr that they might shut petrochemicals crops in Europe. Chemical compounds companies LyondellBasell, Versalis and Trinseo have mentioned they might evaluation or shut services.

Rob Ingram, chief govt of Ineos’s enterprise making olefins — hydrocarbons used as a uncooked materials for chemical and polymer merchandise — mentioned Europe’s bureaucratic and regulatory burden was a “self-inflicted wound”.

With out new funding in Europe, producers wouldn’t be capable to fund the transition to extra sustainable manufacturing, he mentioned.

“Loads of our rivals have both closed or introduced strategic evaluations of European property,” he mentioned. “If everybody packs up store and goes elsewhere, we’re not going to have a [green] transition.”

Ingram added that whereas demand for brand new plastics was sustained in Europe, funding in new capability was as a substitute flowing to the US and Asia.

“As a substitute of them being made in Europe, the place we now have pretty stringent environmental management . . . these supplies could also be produced elsewhere . . . or shipped midway around the globe to be consumed right here,” he mentioned, including: “It’s utterly counterproductive.”

Janssens mentioned the trade needed targets for recycled content material in every thing from packaging to electrical automobiles “as a result of that can drive demand for round plastics and that can assist us”.

“We are also calling upon policymakers for some pressing [help] — whether or not it’s into fiscal or financial measures — to see what they will do to essentially enhance that enterprise case for round plastics investments in Europe,” she mentioned.

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