Europe continues to be the largest masterbatch market in the world, according to the latest research from AMI Consulting. Although the market has seen slower growth in recent years, Europe is still the largest market in volume terms but more importantly is also a key centre for innovation and global brand developments, making it an ideal place to develop new colours and property enhancing products. For many years the masterbatch industry in Europe tended to outperform the overall polymer industry as plastics processors recognised the technical and business advantages of using masterbatch over compound and other systems. However, in recent years the performance of the masterbatch industry has tended to mirror the trends in overall polymer demand resulting in much slower growth with demand averaging increases of less than 2%/year for the past three years. This change in trends has had a profound impact on companies and their strategies, with some players cutting back their activities and closing plants while others have sought wider or new markets to sustain their business. The more difficult economic environment has also revealed itself in variable financial performance with weaker players seeing margins eroded and their survival threatened, while others have used the opportunity of smaller order sizes, just in time delivery and heightened customer service demands to improve their margins.

Thermoplastic masterbatch demand in Europe by type 2015

The market has also experienced differing trends depending on geography. Thus northern Europe has tended to fare better than southern Europe, and Central Europe (especially Poland) and Eastern Europe have continued to grow. In the case of Russia the market has had very strong growth in spite of political uncertainty and declining oil and gas revenues. The largest market for masterbatches in Europe is still for white masterbatch, which accounts for 28% of demand. The white market has had mixed fortunes, with growth in Central and Eastern Europe offset by declining use in certain applications such as bags and sacks. The sharp increase in raw material costs a few years ago also led to smaller addition rates in some applications in the moulding sector. The strongest growth has been for additive masterbatches. This market can grow ahead of the rate for polymer demand because of the increased need to modify the performance of polymers to meet exacting specifications. Also with more resin suppliers producing “barefoot” resins, containing a minimal additive package, more modification is done via the masterbatch route. Europe has always had a strong export surplus in masterbatch of well over 100,000 tons, that has tended to grow despite increasing import levels. This is further testament to the strength and size of the masterbatch industry in Europe. The surplus is most significant in black and additive varieties, but all product types show fairly substantial levels of exports. AMI concludes that the market in Europe will continue to grow albeit at levels much lower than has historically been the case because of much slower growth in the traditional volume markets for masterbatch in polyethylene film and blow moulding. Opportunities will arise in more speciality sectors such as grass yarn and high performance packaging and in the growing use of recycled materials that will require additive packages to modify performance.