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October 21, 2014 02:00 AM

Africa shows promise for plastics growth

EUROPEAN PLASTICS NEWS
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    AMI
    Where demand for plastics is coming from in Africa.

    Large-scale investment in African countries makes the region “one of the most exciting markets for polymers in the world today”, says Applied Market Information (AMI), the UK-based research group.

    It has published a study into the African polymer market, in which it forecasts 8 percent per year average annual increases in African polymer demand over the next five years, with diverse levels of annual growth varying from 5 percent in South Africa to 15 percent in Ivory Coast. 

    AMI acknowledges that Africa is a complex region and that market conditions strongly differ between the well developed North and South African markets and those in most other sub-Saharan countries.  

    It highlights Nigeria, Egypt and South Africa as the largest markets, currently accounting for nearly half of polymer demand in the continent and for nearly all plastic production in the region.

    “Despite significant investments in new capacity in these three countries, Africa remains a net importer for all resins and is expected to remain so for the foreseeable future,” AMI noted.

    Commodity plastics have a dominant share of the African market, with polyolefins accounting for about 60 percent of demand. Polypropylene has the largest volume of demand, with the material being widely used for raffia production for bags and sacks. But AMI says PET demand has grown fast as PET bottles for drinks are replacing low density polyethylene pouches which have traditionally been used.

    The rise in plastics demand has attracted foreign investment in the African industry, especially from China and India, which is expected to carry on in the future. Another key driver for polymer demand is infrastructure development and building activity, with AMI estimating nearly a quarter of plastics demand in Africa comes from these areas. The expansion of Africa's middle class is another key factor. For example, packaging applications now account for just under half of the polymer market across Africa.  

    However, Africa faces a big challenge in increasing its domestic resin production to displace imports, mainly sourced from the Middle East or Asia. Among the obstacles to higher production are unreliable electricity supplies and political instability, says AMI.

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