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FOCUS: Europe’s dependence on polymer imports grows amid lack of competitive power

by Manolya Tufan -
by Esra Ersöz -
  • 14/03/2024 (11:58)
Having lost its net-exporter status around 7 years ago, Europe has been a net importer for all polymers since then, except for PVC. Moreover, the ratio of exports to imports has been falling across the bloc, given declining output amid high production costs and economic slowdown on one side and global capacity additions on the other side.
Now, we will take a look at how the EU’s polymer self-sufficiency has changed over time, disregarding the intra-EU trade (trade between EU Member States) and how the industry adapts to innovations and fast-evolving market dynamics and their impact on the trade balance.

Europe’s polymer exports hit a 20-year low in 2023

As can be seen from the ChemOrbis Stats Wizard chart below, the European Union has been a net importer for all polymers since 2016, although it was vice versa in the previous years, going as far back as 2000. The bloc lost its traditional exporter status and started to import more than it exported. The trade gap was relatively smaller until 2020, while the ratio of exports to imports shrank even more in the following years. In fact, 2023 exports saw their lowest levels since 2003 at around 5.9 million tons.

The ratio of exports to imports fell more visibly in the past 3 years. While the coverage ratio stood at 80-97% between 2016 and 2020, it came to 78% in 2021 and even below 65% in 2022 and 2023. Although the EU27’s imports were indeed down by 9% in 2023 from the 2022 record at 10 million tons , imports still surpassed exports by around 3.4 million tons last year.
How has this happened? Is it here to stay?

The European Union’s journey from being at least self-sufficient in polymers to being increasingly dependent on imports in less than 10 years was indeed the reflection of changing market fundamentals. The lack of competitive feedstocks has left regional producers with squeezed – if not negative – margins, while supply has been gradually ramping up in line with the newly commissioned capacities particularly from the US, Middle East and Asia. This inevitably pushed them to go for plant closures and production cutbacks in a bid to tackle slowing economies. Naturally, exports have been on the decline while the appetite for imports has been relentlessly growing.

Looking ahead, the trade gap is here to stay while the trade imbalance may continue to grow albeit at a lesser degree. More consolidation or plant closure news may also ensue as in LyondellBasell’s decision to close PP line in Italy as well as Trinseo’s styrene closures in Germany and the Netherlands

Europe–EU27–Import-Export Statistics – Yearly – Polymers

The EU27 loses net-exporter status for PP in 2021

Differing from overall polymers, Europe was a net exporter of PP until 2021. However, it lost its net-exporter status for PP three years ago when overall PP imports hit an all-time high at 2.4 million tons.

The coverage ratio gradually declined to 85% in 2021, 77% in 2022 and 75% in 2023 as a result of the simultaneous decline in exports even if imports also receded. This staged a substantial change from the times back in 2009, when exports hit a record high at 2.4 million tons, four times larger than imports.

A combination of disciplined run rate cuts across the bloc and huge capacity additions in China, which pushed Saudi Arabia and South Korea to look for alternative destinations, seem to have led to this change in the trade balance. The pressure from non-European cargoes has outstripped demand across the region that failed to stage a recovery post the pandemic.

Europe relies on import PE at an increasing speed

Unlike PP, the EU was never a net-exporter in PE, looking at the historical data. Exports remained around 2.5-3 million tons in the past two decades, while imports were more or less in line with exports before 2010, picturing a self-sufficient market. However, imports mostly outstripped exports after 2010. The trade imbalance deepened with 2022 imports hitting a record high at over 5 million tons as the ratio of exports to imports came to 52%.

Despite the yearly decline in 2023 imports, they were still considerably higher than exports to stand close to 4.5 million tons, highest level since 2017.

Although the EU’s PE exports have not witnessed a major change over the years, the reason why the region’s imports from non-European partners boomed rests upon the same double whammy of extremely competitive environment and supply glut. While Europe has been going through run rate cuts, Middle Eastern , US and South Korean suppliers have gradually ramped up their sales to Europe at aggressive prices in an effort to compensate their loss in China.

Europe’s PVC exports hit 14-year lows; export-import gap at all-time low

The EU27 has kept its historical position as a net exporter, unlike in other polymers, with 2023 PVC exports standing above 1 million tons. However, the trade balance has changed over the past decade.

Having hit a record high at 1.8 million tons in 2013, exports have mostly been on the decline since then. 2023 exports even suggest the lowest volume since 2009 while the union’s imports have been rising since 2021 to hit a record high at around 700,000 tons in 2023.

What is more, this resulted in the narrowest gap between exports and imports of the union based on the historical data, as can be seen from the ChemOrbis Stats Wizard chart below. As a comparison, during the export peak back in 2013, exports were almost eight-times more than imports; however, this gap appears to have shrunk to 1.5 times in 2023.

Europe–EU27–Import-Export Statistics – Yearly – PVC

This may be attributed to the consolidation efforts within the bloc given low demand and high supply levels that led to some small shutdowns of capacities or forced the industry to merge their businesses. Apart from the capacity additions in the USA and Asia and subsequent competition, run rate cuts seen particularly post the pandemic and global economic headwinds have also served to slow down exports. Indeed, it has been a battle between production cuts versus demand destruction.

It is straightforward to say that Europe may become a net importer in the following years, considering the import pressure and a lack of cost advantage for European suppliers in their export markets. Indeed, high electricity costs that form around half of the manufacturing costs hamper European PVC’s competitiveness compared to other suppliers. Regional producers will run their plants at lower rates this year, while it remains to be seen if potential antidumping duties will curb buying interest for certain import origins.

PET imports remain above 1.5 million tons after 2022 record

Europe has always been a net importer for PET, while the gap between imports and exports grew substantially in the past two years. The overall PET imports remained above 1.5 million tons in 2023, even though they witnessed a slight drop from the record high level seen in 2022.

Accordingly, the ratio of exports to imports fell to 22% in 2022 from 40% in the previous year and to 19% in 2023, which marked the lowest coverage ratio since 2000.

Europe shifts to be net importer for PS; ABS exports still fall short of imports

The union lost its net-exporter status for PS in 2022 and 2023, with imports surpassing its exports, although Europe was a traditional net exporter. While imports gradually increased from 2020 to hit a record-high at 360,000 tons, exports saw decreases for the third straight year in 2023. This was attributed to the capacity rationalisation within the bloc as profitability and market conditions hold a pivotal role in shaping operational strategies.

The exports to imports coverage ratio was 86% in 2022 for PS, while it deepened further to 77% in 2023.

Regarding ABS, historical data from ChemOrbis Stats Wizard suggest that the EU27 mostly imported more ABS than its exports, disregarding a few years of even trade or vice versa. Although imports declined on the year in 2023, they remained above exports that have been falling since their peak in 2021. The coverage ratio fell from 90% in 2022 to 83% last year.
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