Material suppliers find alternative markets amid softening auto demand | Plastics News

Friedrichshafen, Germany — Soft automotive demand and lagging sustainability regulations are shifting the plastics industry toward other markets, creating a competitive atmosphere.

Hamburg, Germany-based Albis Distribution GmbH & Co. KG is looking at extrusion as a potential area for growth, although most of its customer base is in injection molding, Horst Klink, CEO, told Plastics News at Fakuma trade show in Friedrichshafen.

"We just launched an initiative for extrusion," Klink said. "We don't want to step on the toes of our production partners. But … we have to do something to get some support because of the really soft markets.

"The chemical industry, maybe for another two years, will not be able to fully utilize capacities," he said. "That means there's long markets and materials available … so very fierce competition, and we have to focus on efficiency improvements," Klink added.

Albis is asking its existing injection molding customers to investigate uses for a new recycled PET from Amsterdam-based supplier Aloxe, which joined the distributor's portfolio a few weeks ago, Klink said. The recycled PET is processed through polycondensation and is approved for food applications.

Regulation is pushing demand for recycled PET, he said, as all beverage bottles in the European Union must contain 25 percent recycled content by 2025.

"We typically don't sell to bottle producers," Klink said. "We sell to small- and medium-sized injector molders, but you can use [the material] for cosmetics packaging and kitchen accessories. … It's an add-on for injection molders."

Despite lower volumes, cosmetics packaging is "a very demanding business," he said. It requires chemical resistance, dimensional stability, and a consideration of haptics and optics.

"I would not underestimate [when] L'Oreal says, 'We need something that shows value,' and there's a lot of plastics that we can recommend," he said.

The market helping Albis to grow is health care, Klink said. The sector has grown from 9 to 10 percent of Albis' business since the second quarter of 2024, he said, and will continue to grow with the company's team of business development managers in Europe, China, Vietnam and Malaysia.

Since the pandemic, Albis has expanded with warehouses and sales managers in Austria, Greece and Morocco. It expects to continue to grow business outside of Europe, Klink added.

"There is no growth coming from … Europe," he said. "Not much in e-mobility. We've invested so much into [e-mobility and sustainable solutions] product development, [for the European market]. It's really disappointing. We have the entire portfolio. We can offer every sustainable solution: chemical recycling, mass balance, post-consumer and post-industrial. We have it all. But it's still small."

Albis' automotive customers can't afford the additional cost of sustainable materials without strong circular economy legislation, Klink said. "Not a drafted law, but a law that is in place."

"Everybody is waiting for orientation and guidance," he added. "[We] need … green OEMs and Tier 1s who are behind this. Costs are still too high," but the industry needs "to honor that maybe a sustainable solution is a little bit more expensive than the conventional, traditional [materials.]

"The industry will continue to see consolidation," Klink said. "[There's a] huge number of compounders and recyclers — too many. So the circular economy needs to consolidate. I think the crisis could take a little longer [and] contribute to a shakeout process. The industry is going to see some of these changes in time, with [a] little bit [of] support from the politicians, from the legislation, would be nice."

Tarragona, Spain-based Elix Polymers SL is seeing the same trends. "We're still waiting on regulations" that encourage demand for recycled materials, Fabian Herter, marketing manager for Elix, told PN at Fakuma.

Elix is adding to its E-loop portfolio of recycled-content ABS and polycarbonate/ABS resins, which are used mostly in appliances, electric and electronics products.

Elix works closely with local partners in Spain to maintain consistent supply of recycled materials, Herter said.

With a general trend of soft markets in 2024, "everybody was waiting for September," Herter said. But markets are "not looking as good as they expected. … Everybody's hoping on 2025," which is expected to remain stable.

Elix has also seen softening of automotive demand in the U.S. and Europe due to a mix of competitors in China and inflation, he said, adding that automotive is about 20 percent of Elix's business.

Generally, the automotive market focuses on mechanically recycled content because "the chemically recycled content … always [has] a price surcharge," Herter said. "Automotive is really price-sensitive. They're always looking for [mechanically recycled] PCR material at the same price or even lower."

Eventually, Herter said, with regulatory support, automotive suppliers and OEMs will need to come around to higher prices for recycled materials to meet EU targets.

"The good thing is we have a good mix of customers," Herter said. "We're not depending on [automotive demand]. … Polyamide producers depend much more on automotive than us. In our case, consumer goods and appliances are bigger. Washing machines are doing quite good this year. Consumer goods and appliances, even with inflation, is picking up a bit."

Health care has remained a stable market for Elix in Europe and the U.S., as well as demand for chemically recycled content for toy production.

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