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South East Asia is the world leader in plastics consumption

As per a recently published research report, South East Asia has emerged as the global leader in plastics consumption, with over 50 million tons consumption of plastics in 2004, overtaking USA as well as Europe. Asia is also leading growth in the market for thermoplastic polyurethanes (TPU). The consumption of TPU was 357,100 tonnes in 2004, with Asia accounting for just over 50% of demand, Europe 27% and the Americas, the remainder.

China accounts for nearly 65% of all polymer demand and approximately one-third of production. This also illustrates a considerable shortfall in polymer supply in China. With the exception of Vietnam (which has been developing from a much lower base), China has consistently been the fastest growing market in the region for plastics consumption for over a decade, and growth continued unabated through both the recessionary periods of 1998 and 2001. The dynamism of the Chinese economy has been largely immune to global influences. The market is increasingly being driven by developments in China and growth there has fuelled export booms for the rest of the region in commodities, raw materials, machinery and components. Ultimately, the strength of China could undermine the plastics industry in the rest of South East Asia. 2004 was another strong year of growth for polymer demand in China. China 's huge dependency on imported polymer means that the country's polymer markets have become integrated with international markets and follow global trends. Prices of domestically produced and imported materials are being driven up by high international prices for raw materials, as well as oil and naphtha. This is leading to some pain for processors, particularly smaller ones.

The success of China tends to overshadow the situation in the rest of South East Asia , where the outlook is much less certain. If one removes China from the equation, then the market grew only 2.5% for 2004. Demand growth in the rest of the region was affected adversely by the rise in polymer prices and the strength of the Chinese economy.
It is not only processors in Europe or North America who are struggling to compete with Chinese production. The rest of South East Asia is also witnessing a growing trend for manufacturing to relocate to China and its markets susceptible to imports of cheaper finished goods from China. The more developed economies of South Korea, Taiwan and Singapore, are seeing their markets mature and a tendency for plastics processing to move into China, Vietnam and other lower cost locations.
Taiwan has felt the added impact of environmental legislation that banned the use of plastic carrier bags and disposable food containers, leading to falling demand for some polymers. However, certain sectors of the processing industry have succeeded in moving up the value chain and often it is the low end work that has transferred to China.
Indonesia and the Philippines have been struggling to recover the ground lost during the economic crisis of 1998, witnessing a sharp decline in foreign direct investment. Both have seen lower demand in 2004, because of the effects of high polymer prices.
Demand growth was stronger in Thailand and Malaysia for 2004, but here too rising imports of finished goods from China, high polymer costs and the transfer of manufacturing into China was hurting the growth.

Global growth in the consumption of TPU was estimated at 3.8% in 2004. The Asian market showed above average growth, while growth in the markets of Americas and Europe was below average. The two largest sectors for TPUs last year were engineering (29%) and footwear (28%). Slow growth, legislation and the shift of the footwear and engineering industries to Asia has affected the European market. However, many innovations from the sector are emerging through blending and composite technology. China is the dominant country for TPUs in Asia, with a strong focus on footwear applications in the south and east of the country. The alternative markets developing in Asia included TPU resins for applications such as plastic tubing and washing machine hoses.

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