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Masterbatch market in a developed economy

The European masterbatch industry is the largest in the world both in terms of production and demand. In 2006, masterbatch manufacturers in Europe manufactured close to 1 million tons (about 960,000 tons) of masterbatches, while the market demand was just over 800,000 tons. Europe is thus a significant net exporter of masterbatches.
Overall, the market has been showing good growth in recent years, averaging annually at 3% since 2001. This growth has been driven by the increasing penetration of masterbatches in engineering polymer segment as replacement for compounds, and growing usage by polymer manufacturers in their own compounding operations. The greater use of color and special effects to differentiate products have also helped lift demand, along with the requirement for improving performance criteria from polymer materials in terms of UV stabilization, flame retardancy and other features. Nearly all European countries have benefited from this growth with the exception of the UK, which has seen a shrinking of market. The UK market has been particularly affected by the decline in moulding capacity and the transfer of production to Central Europe and Asia. The UK has declined from accounting for 14% of the European market in1996 to 10% in 2006.

However, as with many other sectors of the plastics processing industry, the masterbatch industry also faces pressures with margins constantly squeezed between customers looking to lower their costs and raw material suppliers looking to raise their prices. There has been intense competition and further restructuring in the industry as witnessed by Clairant’s purchase of Ciba’s masterbatch business in Europe last year. The largest market for masterbatches in Europe is white masterbatch, which accounted for almost 30% of demand in 2006. This market, along with black types, is more mature, and has a growth that tends to be below that of other masterbatch types. Another 25% of the market is taken by color masterbatch demand. In the last few years, growth for colored products has slowed as demand from the compound segment has declined. Black masterbatch demand has also been slowing in many markets. Additive masterbatches continue to be the fastest growing sector and is rapidly increasing in importance within the masterbatch market, accounting for almost 25% of the market. This means the additive segment is greater than the size of the black masterbatch segment and almost equal to the color masterbatch segment. It is expected that overall masterbatch demand will continue growing at just under 3% pa to 2010.

The Benelux region has the largest concentration of production accounting for 23% of the total demand in Europe, primarily because of the presence of several large scale producers such as Ampacet, A. Schulman, Cabot and PolyOne. It has a particularly dominant position in the white masterbatch market, and also the largest producing region for color and additive masterbatches. UK is also a large producer because of the presence of Cabot, Hubron & Tosaf.
Benelux is also a significant consumer for masterbatches, due to presence of several large scale film and fiber producers in the region and significant polymer compounding activity. However, the largest markets are, as might be expected, Germany and Italy – accounting for almost 35% of the total European demand in 2006. Benelux with 14% of the total European demand is the third largest consumer. France at 12%, ranks fourth in consumption. UK takes the fifth position at 10% share of the European masterbatch consumption in 2006.

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