The employers associations, AEPP and FETEP, and industry representatives recently provided a general diagnosis of the sector. We have briefly summarised their findings.

Economy: Some slight signs of a possible recovery are suggested, but all sources remain pessimistic. No real change is expected until 1995. In Spain, available statistics are conflicting. According to the Government, GNP fell -0.8%, but other reliable sources calculate that the fall was exactly double or -1.6%. Given the recession, inflation remains unacceptably high. Unemployment continues to rise and, in any case, will only change long after other indicators improve. On the positive side, three successive devaluations have helped the trade balance. Also, the expected influx of tourists will generate much needed, albeit seasonal, employment.

This year's forecast: GNP provisions for 1994 are even more confusing, figures suggested range from a modest 0.5% to an optimistic +1.3 according to different official sources. Employers agree that measures are needed to improve Spanish competivity, e.g. labour market reform, public spending control, industrial electricity charges moderation, increased competition in services sector, greater investment in infrastructure, close collaboration with the trade unions. Capital good spending should be stimulated, as it has long been paralised; that would inject life into the economy.

Production: 1993 was worse than 1992, companies even reported financial losses. The impression is that the first month of 1994 has been better than the catastrophic 1993. The cheaper Peseta allowed exports to grow in the latter half of the year and succeeded in saving the plastics sector. Though definitive figures are not yet available, the plastics organisation ANAIP has collated data which shows that production increased by 0.6% in volume but fell by 6,2% in currency terms. ANAIP also calculates that consumption in Spain fell by 6% during 1993.

Low density polyethylene sales fell 6% in the period till November, compared to the smaller 4% drop registered in Europe. Prices have also fallen, they are now at 1.00 DM compared to 1.15 DM in November. Demand in 1994 seems to have dropped, probably due to extra purchasing by companies in December.

Nevertheless, high density polyethylene is performing better. Sales have only fallen 1% in the same period but overall should be in line with the previous year. Prices have fallen from 1.05 DM in November to the present level of 0.90 DM. However, 1994 has begun badly in this sector.

The demand for polypropylene has increased, a 4.3% increase was registered in the period till November and sales have now increased by 6%. Prices have stabilised at approximately 0.85 DM. Increased consumption is forecast for this year.

PVC sales are similiar to levels registered in 1992. In contrast, a good second half compensated for poor sales at the beginning of 1993. Spanish PVC production has fallen mainly because Elf imported material, due to break in production. Prices have been erratic, they rose during the year, then fell in January to below 1.20 DM, but price increases are expected in the next few months.

Polyesterene sales fell slightly by 1.5%, but there is improvement in this sector and prices have risen between 10-15% during the year. Because of no demand from the construction sector, demand for expanded polyesterene fell sharply by 7.5%, prices came under particular pressure falling 10%. The panorama for technical plastics is especially serious. Sources calculate that the ABS market has fallen 11%, prices are very low. Demand in the automobile and toy sectors is particularly weak.

Converters: 1993 and especially the last 3 months were a disaster for plastic converters. Some companies report excellent sales during January 1994, but February sales have again been disappointing. By sectors, results are as follows:

Automobiles: Car sales plummeted 25% in 1993, but Spanish-made car sales fell even more, by 37%. 1994 has brought much needed improvement to the sector. In January sales increased by 37% but, it must be remembered, January 1993 was a "black" month as sales fell 36% vs January '92. However, the Automotive Association (ANFAC) is predicting a 4.8% increase in car sales in Spain for 1994.

Polyurethane: As demand depends mainly on automotive sales, polyurethane sales have fallen in proportion. As regards its use in other sectors, such as furniture, production and sales fell 8% during 1993. Exports have practically ceased. 1994 has begun badly and the situation is not expected to improve. Clients are holding too much stock, the only hope is that hotels and apartments will renovate installations because of higher occupancy rates. This subsector is particularly worried by low sales margins as clients negotiate and non-payment is becoming a very serious problem.

Sheets: In PVC sheets, mass market consumption has held up but imports and non payments are jeopardising results. In civil engineering, there are many projects in the pipeline and exports also offer opportunities.

Film: Sadly, many companies have been forced to close down in the industrial and agricultural film subsector but survivors will be able to increase their market share. Exports have provided a lifeline to manufacturers, in particular to European and north African markets. Here again, the high level of defaults combined with low level of profits are forcing many companies to live from "day to day".

EPS: Sales of expanded polyesterene have fallen 6%. The packaging sector, which depends on a reduced number of companies, e.g. for computers and household appliances or, alternatively, on the construction sector, is suffering from soft sales. EPS use in the food sector has increased. More fish boxes are being made, because of EU regulations. Other sectors are more problematic, agriculture and construction are underperforming. Civil engineering projects, like bridges and tunnels, which are now under tender will create demand over the next few months.

Bottles: There is battle in progress between PE, PVC and PET for the mineral water and soft drinks sector. Prices are beginning to level out between the three and the market will become harder.