Growth in thermoplastic compounding activity Asia, like the polymer industry, is showing a higher growth pattern. Thermoplastic compounding in Asia has been averaging increases of over 9% pa since 2000, with 2005 witnessing an 8% increase to levels of over 8.4 million tons. The market has been driven by swelling demand for compounds in sectors such as construction (pipe and building profiles), automotive, household appliances, electronic equipment, wire and cable. Asia overtook Europe in volume terms during 2004 and is expected to continue its march ahead, while growth in Europe will stagnate, as per a report by AMI. The compounding industry in Europe has performed relatively weakly in recent years, with production growing at only 1-2% pa overall since 2000, around 1% point behind that of polymer demand growth for this period. This has largely been a consequence of the decline in production of the larger volume colour compounds and relatively static production for PVC compounds. Production is estimated to have grown by less than 1% in 2005 reflecting the further slowdown in polymer demand.
 
The structure of production is very different in the two continents. Asia has a high level of colour and PVC compound output, while Europe has a higher production and usage of masterbatches and filled compounds. The market for colour compounds is particularly significant in South East Asia because of the large consumption of styrenics (PS and ABS) for electrical and electronic products, toys and consumer goods. However, in recent years, the use of masterbatches in Asia has been growing rapidly. It has been one of the fastest growing sectors of the compounding industry with demand almost doubling in 5 years, increasing from 320,000 tons in 2000 to over 600,000 tons in 2005.
In Europe, masterbatch production is well established and has continued to show good growth as processors have switched to using masterbatches for a variety of technical and commercial reasons. It has been averaging increases of 4% per year since 2000 with current output over 900,000 tonnes, making it the strongest performing sector of the compound market.

In terms of distribution across Europe, the pattern largely follows that of polymer demand, with Germany and Italy accounting for the largest volumes of output. However, the relative importance of the Benelux region is noteworthy, resulting from the location of several major multinational compounding groups in the area, as well as the high concentration of resin production and associated compounding. In both cases this has largely arisen because of the Benelux's central location within Europe and its suitability for exporting throughout the region.  

The market in Central Europe is substantially different from that in the West with a higher proportion of PVC compounds being manufactured compared with most other types. Almost half of all compound production in Central Europe is for PVC types.  In Asia apart from China, thermoplastic compounding activity is rapidly growing in Thailand and India. Malaysia and Indonesia are also showing good growth prospects.