European Plastics Industry – Competitiveness and Challenges Karl-H. Foerster Wednesday 28 October 2015 III Moscow International Chemical Forum

World Plastics Production* by Regions Asia with the leading country China (26%) mean- while accounts for nearly half of worldwide production Europe and NAFTA are on a similar level each with a share of around 20%. 2

PlasticsEurope European Union (EU28) Plastics Industry Production Source: Eurostat / PlasticsEurope Market Research Group (PEMRG) Actual data status of Production: 06/2015 Issue August 26, 2015 / Expiration / Slide Continuous growth due to rising demand in Central Eastern Europe and positive GDP development Real economy crisis Since 2010 Slight growth in line with GDP development

4 Europe Plastics Demand* by Segments 2014 Packaging and Building & Construction represent the largest end-use markets Automotive Industry, accounts for nearly 10% Others includes Consumer, Agriculture, Household, Appliances, Furniture, Medical, etc.

Europe Plastics Demand by Countries in EU27+N, CH incl. Other Plastics (~5.6 Mio t) Source: PlasticsEurope Market Research Group (PEMRG) & in Cooperation with Eastern and Central European Business Development (ECEBD)/ Consultic Marketing & Industrieberatung GmbH Demand in Europe rose by 2,6% vs Demand in Western European countries increased by 2.4%, while demand in Central Europe rose by 4.9% in 2014 Germany and Italy, account for nearly 40% of total

IMPORTS/EXPORTS EU28 – EASTERN EUROPE 6 Steering Board, Brussels, 27 November 2012 in Mio. Euro Source: Eurostat, Chemdata

Continued Export Surplus of around €18b 7 Exports of plastic raw materials and products in €m

European plastics producers participate in the growth of China 8 Source: PlasticsEurope, Eurostat- extra EU28 trade 2014 Exports (in kt): 1.China (2,876) ; 4.8% 2.Turkey (2,527) ; 4.2% 3.Russia (1,152) ; 1.9% 4.Hong Kong (1,111) ; 1.9% 5.Switzerland (913) ; 1.5% Exports (in kt): 1.China (2,876) ; 4.8% 2.Turkey (2,527) ; 4.2% 3.Russia (1,152) ; 1.9% 4.Hong Kong (1,111) ; 1.9% 5.Switzerland (913) ; 1.5% Imports (in kt): 1.Saudi Arabia (1,664) ; 3.2% 2.USA (1,120) ; 2.2% 3.South Korea (1,105) ; 2.1% 4.Norway (430), 0.8% 5.Switzerland (388) ; 0.8% Imports (in kt): 1.Saudi Arabia (1,664) ; 3.2% 2.USA (1,120) ; 2.2% 3.South Korea (1,105) ; 2.1% 4.Norway (430), 0.8% 5.Switzerland (388) ; 0.8%

9 Competitiveness of European plastics industry threatened by a number of “game changers” 9  Strong investments in chemicals (also on public side)  3 rd world’s exporter of plastics machineries (11.6% global share, besides Germany and Japan)  Emphasis on coal- to-chemicals  ~33% of world bioplastics  Opportunities for Brazilian petrochemical industry  Energy costs reduction due to non-conventional fuels (shale gas: 36% of U.S. energy production in 2035)  Direct access to fossil resources (67% world’s oil reserves and 45% world’s natural gas reserves)  External growth and integration processes in downstream phases  Strong growth mainly in plastics converting (10%- 12% CAGR, more than 22,000 companies and 4 Mln employees)  Key drivers: demographic and manufacturing industry (automotive, etc.) Source: the European House – Ambrosetti elaboration based on different sources, 2013

The European Plastics Industry A Strategic Sector for Europe to achieve: Economic Recovery Sustainable Growth 10

11 The European Plastics Industry: a pillar for economy and society The European plastics industry accounts for:

12 The European plastics industry contributing with a significant multiplier effect The Multiplier Effect

13 Plastics: A Key Enabler of Innovation 13 Top five of the most innovative sectors in the EU During the period more than patents. Represents 4.2% of all the patents submitted in the European Union.

The European Plastics Industry A great contributor to a resource efficient Europe Circular Economy (zero landfill leads to more recycling) Reduction of Energy Consumption (houses, transportation) Food Waste 14

PlasticsEurope is A Pan-European Organisation 15 Brussels and 5 Regional Centres: (North) London (Central) Frankfurt, Vienna, Warsaw (West) Paris, The Hague (Mediteranean) Milan (Iberia) Madrid

Regulatory context Plastics Food Contact Packaging & Packaging Waste Waste legislations Product Legislations REACH Endocrine Disrupters Marine litter 7th Environmental Action Programme Bio Economy Resource Efficiency Circular Economy Energy & Climate Sustainable Consumption & Production

17 Today’s perceptions Source: akkanto What “plastics “ say What “stakeholders“ say

18 Today’s perceptions What “plastics“ say What “stakeholders“ say Source: akkanto

19 Today’s perceptions What “plastics“ say What “stakeholders“ say Source: akkanto “The plastics industry is at the forefront of innovation in Europe”

Concern No. 1: Waste & Littering 20 Landfilling of Plastic Waste Marine Litter

1. Landfilling is still the most common waste treatment option for Plastics 21 Energy Recovery 36% 8.9 mt Landfill 38% 9.5 mt Recycling 26% 6.6 mt Treatment of post-Consumer Plastic Waste in Europe in 2012: Municipal Solid Waste Incineration Fuel for energy intensive industrial production, e.g. chemicals, cement etc. 25 mt Source: Consultic, 2013 PlasticsEurope Campagne: Zero Plastics to Landfill by 2025

2. Do plastics affect our health?

2. Emotions and plastics 23

Towards a Resource Efficient Europe 24 Towards a more resource efficient economy Use less resources over the whole product lifecycle Use unavoidable waste as a resource Circular Economy Reuse Recycle