Fitch: EMEA Plastics Players' Gains on Weak Oil to Fade in Medium Term
The fall in the oil price since 4Q14 has benefited the margins of naphtha-based EMEA and Asian plastic producers such as Ineos Group Holdings S. A., Inovyn Finance plc, Trinseo, PAO SIBUR Holding (BB+/Negative) and PJSC Kazanorgsintez (B/Stable) as cheaper oil-linked naphtha feedstock was followed by a significantly smaller decline in the pricing of their respective plastics products. Gas-based North American and Middle Eastern players have not enjoyed comparable feedstock cost declines but have maintained their global cost leadership and resilience to the plastics pricing pressure.
We expect plastics pricing pressure to continue in 2017-2018 as new North American and Middle Eastern capacity comes on-stream without being matched by corresponding demand growth. In particular, demand growth from the emerging economies is expected to be below the levels of the past decade as their gap with developed economies in plastics per capita use shrinks.
The report addresses the market structure and end-markets for most common plastics, and their impact on price and volume volatility. Regional feedstock and consumption differences as well as the plastics markets medium-term outlook, and its impact on EMEA players are also within the scope of the report.