Asian demand for compounds reached nearly 11m t in 2010, a year-on-year increase of almost 7%, according to a new study published by British researcher Applied Market Information (AMI, Bristol; www.amiplastics.com). That figure is still low compared to the average growth rate of 9% per year witnessed in the first half of the decade. However, the economic crisis put a serious dent into the curve, with demand growth slowing to an average of 5.5% per year in the five years from 2005-2010, AMI says in its “Guide to the Thermoplastics Compounding Industry in Asia”. Key industries include building and construction, automotive, household appliances, electronic equipment, wire and cable.

Whereas the western compounding market tends to be more integrated, only 10% of the 1,038 Asian companies AMI examined were integrated. Clearly, the Asian market is dominated by independent companies. However, whereas “integrated compounders tend to dominate the industry in volume terms”, the independent sector is growing in importance with the development of masterbatch and more technically sophisticated compounds, AMI says.

The largest Asian consumer and producer of compounds continues to be China, although AMI points out that both Vietnam and India have also seen a boost to their compounding business.

At 44% of the total, or 4.7m t, colour compounds accounted for the largest share of Asian demand last year, the study found. In order to match specific customer requirements, resin producers have traditionally dominated this field to ensure colour control and consistency. Nevertheless, AMI says that as the technology for colour compounding becomes more widely available, the number of independent compounders has risen.

However, most independent compounders still supply largely unsophisticated colour compounds to injection moulders. AMI explains that “entry barriers to this sector of the industry are low, machinery is available on the second hand market, and the technical knowledge relatively easy to obtain.” But the number of compounders capable of producing more advanced technical compounds reportedly is on the rise – the study points out that such operations either tend to be integrated into polymer production or are run by major international players who can assure their products’ quality.

South East Asia’s colour compounds market is particularly significant, AMI says, because of its large consumption of styrenics (specifically PS and ABS) for E&E applications. However, the more modern ABS plants in countries like Taiwan and Korea operate a continuous process that requires little or no background colour at all. “This,” the researcher says, “means that the processor can achieve greater consistency of colour using a masterbatch or even powder pigments.” Indeed, the study found that powder pigments still dominate the Asian processing sectors, especially in industries where quality or consistency are not that important, including, for example, toy manufacture in China. The method of processors dosing pigments directly into the moulding or extrusion equipment is not only attractive from a cost-perspective, AMI says, it also “tends to be used in products which are for the local market, rather than those destined for export.”

One of the fastest growing sectors of the compounding industry has been masterbatch, accounting for 6.7% of all Asian demand last year. Overall, AMI says, demand rose from 575,000 t in 2005 to more than 800,000 t last year. Of this, colour masterbatch accounted for the largest share of demand (at roughly 30%), followed by black, white and then additive masterbatch. The researcher points out that there are a number of factors contributing to masterbatch growth in Asia, including the tight specifications of Western or Japanese OEMs, which often tell processors the type of masterbatch to use, as well as the fact that many Asian companies supply western markets. Consequently, they need to abide by western standards and qualities – both arguments that speak for the use of materbatch.

Nevertheless, AMI emphasises that the Asian masterbatch market is highly diverse, ranging from the more well-developed (including Singapore, Taiwan and Korea) to more small but rapidly developing markets (such as Vietnam and India).

Growth in Asia’s polyolefin technical compound sector, which accounted for a little more than 9% of Asian demand last year, has been stimulated by the increasing use of materials such as glass fibre, flame retardants or UV stabilisers in the automotive industry, appliances and consumer electronics. AMI says that Japanese OEMs have been a leading influence here thanks to their tendency to favour polypropylene over more expensive engineering resins. “The market has been growing rapidly driven by the displacement of Japanese manufacturing of these products to China and by rising living standards throughout creating increased demand for these products.”

For more information, see “AMI’s Guide to The Thermoplastics Compounding Industry in Asia”, 3rd edition, AMI 2010, details: www.amiplastics.com

Contact: Regine Futter, Tel: +44 117 9249442, E-Mail: rfutter@amiplastics.com