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Report on Construction and Plastic Packaging Industry

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Oct 1 2009

Research and Markets has announced the addition of Frost & Sullivan's new report "South African Market for Commodity Plastics" to their offering.

This Frost & Sullivan research service titled South African Market for Commodity Plastics provides an overview of the South African commodity plastics market with insights into the industry challenges, market drivers and market restraints and determines their impact on the future market demand for commodity plastics. This research service also assesses the competitive structure and distribution channels and identifies the key success factors of suppliers. In this research, Frost & Sullivan's expert analysts thoroughly examine the following markets: commodity plastics, which include polypropylene (PP), linear-low-/low-density polyethylene (LL/LDPE), high-density polyethylene (HDPE), polystyrene (PS), polyvinyl chloride (PVC) polyethylene terephthalate (PET), plastic packaging and construction. The technologies covered are film, foam, fibre, injection and blow moulding and extrusion.

Market Overview

Fluctuating commodity prices and the small market size have significant knock-on effects on the South African commodity plastics industry, consequently resulting in a major price pressure for suppliers. New polymer producers do not see themselves getting established in the near future due to the small market size. The outlook for the long-term, however, is positive with drivers such as continued substitution of conventional materials with plastic, ongoing housing and infrastructural developments and tourism due to the 2010 Fédération Internationale de Football Association (FIFA) World Cup. This will present many opportunities and sustain market growth. "Packaging, construction and tourism industries are vital to sustain the demand for South African commodity plastics," says the analyst of this research. "Many opportunities will arise as the market sees increased consumer demand and government spending on housing and infrastructural development." High consumer demand is expected during and after the 2010 FIFA World Cup.

An estimated two million visitors are set to support significant growth, particularly in the plastics packaging industry. Promisingly, government spending on housing and infrastructural development has continued despite the global economic slowdown. The plastic packaging industry is the primary end user of commodity plastics in the South African market. This industry is anticipated to grow due to increasing consumer demand triggered by tourism and the expanding upper and middle class. Government spending on infrastructural developments will sustain the demand for commodity plastics in the industrial sector for many years as an emerging economy.

Suppliers to Focus on Emerging Sub-Saharan African Countries to Successfully Enter Them

Amongst the challenges in this industry, high technological barriers to entry are restraining local infrastructural growth. The high cost of equipment, together with the small market size, does not justify this investment. "This makes its particularly challenging for smaller market participants to compete at the level of the already established producers," remarks the analyst. "Further, South Africa's distance from high consumption markets restrains infrastructural development for exports."

While the South African commodity plastics market size will only see opportunities for growth in the long term, much progress has been made in key sub-Saharan African countries to present opportunities, with energy-related infrastructural developments paving the way for industrial growth. Commodity plastic suppliers are looking into these emerging markets for expansion. "Suppliers should focus on emerging sub-Saharan African countries and penetrate into these markets," concludes the analyst. "Recent energy related infrastructural development in these countries will open the pathway for industrial growth, and present potentially lucrative opportunities."

Market Sectors

Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research: