Plastic Compounding Market - Forecast(2023 - 2028)

Plastic Compounding Market Overview

The plastic compounding market size is forecast to reach US$88.1 billion by 2027 after growing at a CAGR of 5.4% during 2022-2027. Plastic compounding involves the processing of plastics to obtain multiple plastic compounds of thermoplastic elastomers and thermosetting polymers with specific properties by adding a wide variety of additives and modifiers. A wide variety of compounded plastics such as polyethylene terephthalate, polyurethane, acrylonitrile butadiene styrene is obtained. These plastic compounds are later used in multiple industries, ranging from automobiles to aerospace and appliances. The automobile industry is one of the largest consumers of compounded plastics where these materials are utilized in the production of several automobile parts to manufacture lightweight vehicles and increase fuel efficiency. The automobile industry is booming globally with increasing production and sales and this is expected to contribute to the market’s growth during the forecast period. For instance, according to the October 2021 stats by Maruti Suzuki, total sales in the mini and compact segment accounted for 471,089 units between April-October in 2021-22 which was 430,851 units between April-October in 2020-21. Furthermore, compounded plastics find their massive uses in the construction sector owing to their ability to withstand harsh environmental conditions and robust strength. These plastics are utilized in several construction applications such as flooring, safety windows, doors, cables, and plastic pipes. The construction sector globally is displaying tremendous growth and this, in turn, is expected to influence the market’s growth during the forecast period. For instance, according to the January 2021 report by India Brand Equity Foundation, demand for residential properties in India has increased due to growing urbanization in the country. The fluctuation in the prices of raw materials might hamper the market’s growth. 

COVID-19 Impact 

The plastic compound market was badly impacted due to the COVID-19. Disruption in the supply chain and idling of factories affected the business in the market. Market players adopted different contingency plans to withstand the unprecedented situation amid the pandemic. Furthermore, the market’s growth was further hampered due to the stagnant growth in the automotive and construction sector. The market had decent growth towards the end of 2020. Going forward, the market is projected to witness robust growth due to the massive expansion of the automotive and construction sector. 

Report Coverage

The report: “Plastic Compounding Market Report - Forecast (2022-2027)”, by IndustryARC, covers an in-depth analysis of the following segments of the Plastic Compounding Industry. 

By Product Type: Polypropylene, Polyethylene, Polyvinyl Chloride, Polystyrene, Polyethylene Terephthalate, Polyurethane, Acrylonitrile Butadiene Styrene, Polycarbonate, Polyamide, Polybutylene Terephthalate, Others.
By End Use: Automotive (Passenger Vehicle, Commercial Vehicle, (Light Commercial Vehicles, Heavy Commercial Vehicles)), Appliances, Construction (Residential, Commercial, (Office, Hotels and Restaurants, Concert Halls and Museums, Educational Institutes, Others)), Furniture, Healthcare, Food and Beverage, Aerospace and Defense, Electrical and Electronics, Others.
By Geography: North America (USA, Canada, Mexico), Europe (UK, Germany, France, Italy, Netherlands, Spain, Russia, Belgium, Rest of Europe), Asia Pacific (China, Japan, India, South Korea, Australia, and New Zealand, Indonesia, Taiwan, Malaysia, Rest of Asia Pacific), South America (Brazil, Argentina, Colombia and Rest of South America), and RoW (Middle East and Africa). 

Key Takeaways

• Polypropylene compounds dominated the market in 2021. This type of compounded plastic offers robust chemical and heat resistance, making it the got to option in the market. 
• The growth in automotive sector is driving the market’s growth. For instance, according to the data by the European Automobile Manufacturers Association, in June 2021, registrations in passenger cars surged by 10.4% compared to the registrations in the same month last year. 
• The Asia-Pacific region is projected to witness the highest demand for plastic compounding owing to the booming automotive sector in the region. For instance, as per the stats by India Brand Equity Foundation, the passenger vehicle segment witnessed a growth of 28.39% as sales touched 279,745 units in March 2021 compared to 2,17,879 units in March 2020. 
  
  

  Figure: Asia Pacific Plastic Compounding Market Revenue, 2021-2027 (US$ Billion)

  

Plastic Compounding Market Segment Analysis - By Product Type 

Polypropylene compounds dominated the plastic compounding market in 2021. This type of compounded plastic comes with lower density, flexibility, toughness, and good heat resistance properties, making it suitable for the production of lightweight and durable parts in several end-use industries. Owing to such diverse properties, market players and research organizations are focused on the expansion of the polypropylene compounds portfolio. For instance, as per the March 2019 journal by Multidisciplinary Digital Publishing Institute, bio-based polypropylene compounds were developed with the help of the extrusion compounding process. Such massive development of polypropylene compounds is expected to increase its demand in the forecast period. 

Plastic Compounding Market Segment Analysis - By End Use

The automotive sector dominated the plastic compounding market in 2021 and is growing at a CAGR of 6.1% during the forecast period. A wide range of compounded plastics of thermoplastic elastomers and thermosetting polymers such as polypropylene, polyurethane, and acrylonitrile butadiene styrene is used in the production of multiple automotive components such as bumpers, seat covers, electrical cables, and doors. The automotive industry is booming globally and this is expected to contribute to the market’s growth during the forecast period. For instance, according to the 2021 stats by European Automobile Manufacturers Association, the passenger car registrations in European Union in May 2021 surged by 53.4% compared to May 2020. Similarly, as per the data by the China Association of Automobile Manufacturers, the annual sales volume of new energy vehicles in China will touch 3 million units by 2025 compared to 1.2 million units in 2019. Such massive growth in the global automotive sector is projected to increase the use of compounded plastics, thereby stimulating the market’s growth during the forecast period. 

Plastic Compounding Market Segment Analysis - By Geography

The Asia-Pacific region held the largest market share in the plastic compounding market in 2021, up to 34%. The high demand for compounded plastics is attributed to the booming automotive sector in the region. Compounded plastics are utilized in the production of several auto components such as bumpers, trims, doors, and seat cover in the region’s automotive sector. The automotive sector is displaying exceptional growth and this is projected to increase the demand for plastic compounding during the forecast period. For instance, according to the stats by India Brand Equity Foundation, India’s electric vehicle market segment will become a US$ 7.09 billion market by 2025 with two-wheelers and three-wheelers anticipated to witness the highest demand. Similarly, as per the data by the China Association of Automobile Manufacturers, production of commercial vehicles in China stood at 310000 units in September 2021, increasing 35.5% month on month. Such massive growth in the region’s automotive sector is projected to bolster the demand for plastic compounding in the forecast period. 

Plastic Compounding Market Drivers

Expanding construction sector will drive the market’s growth 

The construction sector is one of the important markets for compounded plastics. The compounded plastics are used in several construction applications such as flooring, safety windows, cables, and plastic pipe, owing to their ability to withstand harsh environmental conditions and robust strength. The construction sector is expanding globally and this is expected to augment the growth of the market during the forecast period. For instance, according to stats by India Brand Equity Foundation, FDIs in the construction development sector (townships, housing, built up infrastructure and construction development projects) between April 2000 and June 2021 were recorded at US$ 26.14 billion. Similarly, as per the data by European Construction Industry Federation, net investment in new construction works in 2020 accounted for USD 13.46 billion which was 9.3% higher than 2019. Such massive expansion in the construction sector globally is projected to increase the higher use of compounded plastics, ultimately stimulating the market’s growth during the forecast period. 

Booming automotive sector will drive the market’s growth

The automotive sector is one of the largest markets for plastic compounding. A wide spectrum of compounded plastics of thermoplastic elastomers and thermosetting polymers such as polypropylene, polyurethane, and acrylonitrile butadiene styrene is used in the production of several automotive components such as bumpers, seat covers, electrical cables, and doors. The automobile sector globally is booming with increasing production and sales and this is projected to drive the market’s growth during the forecast period. For instance, according to the data by India Brand Equity Foundation data, India became the fifth-largest automobile industry in 2020 globally with 3.49 million units of automotive sold combinedly in the commercial and passenger vehicles segment. Similarly, as per the stats by European Automobile Manufacturers Association, hybrid electric vehicles accounted for 11.9% of total cars sold in 2020 which was 5.7% in 2019. Such a huge boost in the automotive sector globally is anticipated to increase the high uses of plastic compounding, thereby contributing to the market’s growth during the forecast period. 

Plastic Compounding Market Challenges

The fluctuation in raw material prices might hamper the market’s growth 

The plastic compounding market includes raw materials such as polyethylene, polypropylene, and polyethylene terephthalate. These are petroleum-derived materials whose prices are fluctuating due to the volatility in the price of petroleum and this is expected to hinder the growth of the plastic compounding market during the forecast period. As per the stats by ourworldindata.org, the crude oil price in 2017 was recorded at USD 54.19 per barrel which increased to USD 64.21 per barrel in 2019. In 2020, the oil price again plunged to USD 41.84 per barrel. Such fluctuations in oil prices created volatility in the petroleum prices, leading to the fluctuation in the raw material prices. These fluctuations in the prices of raw materials might hinder the growth of the plastic compounding market in the forecast period. 

Plastic Compounding Industry Outlook 

Investment in R&D activities, acquisitions, product and technology launches are key strategies adopted by players in the plastic compounding market. Global Plastic Compounding top 10 companies include: 

1. Celanese Corporation
2. BASF SE
3. Lanxess AG
4. LyodellBasell
5. Solvay SA
6. Kraton Corporation
7. SABIC
8. Chevron Phillips Chemical Company
9. Covestro AG
10. Arkema Group
11. Other

Recent Developments 

In January 2019, Celanese Corporation acquired India’s thermoplastic compounders, Next Polymers Ltd. This acquisition enabled Celanese to serve nylon and other engineered materials customers with better service levels. 

In May 2019, BASF increased its compounding capacity for engineering plastics by 15000 tons per year at its Altamira plant. Through this expansion, the company was addressed the demand for the engineering plastics market in Mexico. 

In September 2019, Lanxess opened its new plastics compounding plant in China. The plant opening allowed the company to address the increased demand for lightweight materials in the automotive industry. 

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