The plastics industry rode through a bumpy 2020 only to enter into the beginning of potentially more turmoil in the years ahead. Its prospects look good in the near term, as at least one consultancy sees the global plastics market experiencing a 5% increase in 2021, due to demand and markets rebounding.
As environmental, social, and governance (ESG) factors play a larger role in business, the plastics industry will face pressure to evolve to meet consumer and regulatory expectations.
Continuing to turn a profit while also adapting to meet ESG goals will be a significant challenge for the plastics industry.
Here are three plastics industry trends to watch out for:
1. Uneven global recovery
2020 showed divergent paths for major markets in the global plastics industry. By the end of the year, America saw some growth over the previous year. Europe, on the other hand, continued its decline that started in 2018. There is very little available data on the state of the world’s largest plastics producer, China. One market research analysis reported a 20.8 per cent decline in 2020, due to downstream pandemic effects. This is likely too pessimistic for an overall economy that still grew by 2.3 per cent.
Europe, which produces about 16 per cent of the world’s plastic, expected to see an 8.5 per cent decline in production in 2020, according to its plastics trade association, Plastics Europe. Although the recovery began in June, 2020, Plastics Europe does not expect production to reach pre-pandemic levels until 2022.
In America, which produces a fifth of the world’s plastic, second only to China’s 30 per cent, outlooks have more optimism. Having proposed three potential recovery scenarios, Perc Pineda, chief economist for the Plastics Industry Association, said even the most bullish projection could be conservative.
The American Chemistry Council reported that plastic resin was the only chemical segment to see positive growth in 2020. The Covid-19 pandemic drove much of that growth by generating demand for cleaning and personal protection equipment products.
2. Increased scrutiny and restrictions
Public awareness of plastics’ waste problem has been slowly translating into political action around the world. It does not appear like it will abate. A bombshell investigative report from NPR/PBS revealed in 2019 that industry executives for decades have promoted recycling to cover for increased production and waste. One of HBO’s most popular shows, Last Week Tonight with John Oliver, featured plastic waste in its most recent season.
Growing calls for stricter regulations in America might require American producers to operate in a regulatory environment more akin to the European Union, which has been notably progressive in tackling waste. The European Commission’s 2008 waste management directive laid out many regulatory innovations for EU countries to adopt as law, including the concept of “extended producer responsibility” and setting recycling and recovery targets. The EU has now also banned waste exports and single-use plastics as of 2021.
One-hundred and forty-one jurisdictions around the world have implemented some form of restriction on plastics, following Europe’s lead. Africa is leading the world in plastic bag bans, while China, Europe, and Canada are all phasing out single-use plastics.
Plastics producers will need to adapt to a regulatory environment that places much stricter controls on waste management and plastic’s entire lifecycle.
3. New materials
Adaption can look like developing alternative materials to plastic. Whereas traditional plastic appears to face mid- to long-term headwinds, there is an opportunity to find replacements. The biodegradable plastics market is set to grow 13.3 per cent per year from 2020-2027, reaching $4.2 billion.
The packaging sector is the most obvious place to start, where “compostable” bags are beginning to replace plastic bags in anticipation of their ban. A Singapore-based design studio has created a takeaway container that can not only be composted, but also eaten.
As many of these new types of materials are still nascent technologies, it will be a question of developing a market and scaling them up.
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