NEUSS, GERMANY — Volume demand for plastic building profiles in Western Europe is set to rise about 4 percent annually during the next five years, but the sector will see a lower rate of increase in value terms.
Oversupply will continue to keep prices low and restrict profitability. But the industry can expect new reorganization with ``a lot more rationalization to come,'' predicts Tony Jones, head of client research at European industry consultancy Applied Market Research Ltd.
Some leading European players in the building profiles sector, in which window profiles represent an estimated 56 percent of output, are aiming at low-cost production through greater vertical integration in manufacturing and supply, Jones told about 100 delegates at the Profiles '99 conference, held March 2-4 in Neuss.
New market opportunities should open up through advances in both material and process technology. However, the entry of new materials including polypropylene, polyethylene, ABS, thermoplastic elastomers and coextruded styrenics will barely dent the dominance of PVC, Jones said.
He added that already-powerful profile players in Europe — such as Germany's Veka AG and the Belgian group Deceuninck Plastics Industries NV — are expected to continue to expand globally.
Leading European profile players are staking claims in big potential markets in Eastern Europe and in Turkey, which has an expanding industry of its own. Production is growing in Poland, which has 26 profile extruders, and in the Czech Republic, which has seven. Russia is importing mainly from Germany and Turkey, according to Jones.
According to AMI statistics, there are nearly 800 profile extruding sites in Western Europe. Some 446 produce building profiles, with 40 percent making window profiles. Britain has 104 sites, Germany 101 followed by France with 65, Italy with 61 and Spain with 46 plants.
Jones pointed out that in 1998, the region's construction profiles sector used 2.6 billion pounds of PVC resin. The polymer represents 95 percent of all material used by the sector. Other resins will make marginal inroads, raising their share by no more than 2 percent in the next five years, he predicts.
``There will be slight penetration of these other materials against PVC. However, PVC is here to stay. It has proved itself as a low-cost, effective material in the profiles industry,'' Jones said.
In Europe, the 50 largest building profile producers last year held an estimated 81 percent market share.
The top 10 companies held a 30 percent share. Jones predicted that this dominance by the 50 big players will rise 1 percent by 2002.