Major Global Plastic Producers: Emerging Economies Will Be Key Growth Drivers for the Plastic Industry

Currently, the plastic industry remains mired in a cyclical downturn, with weak demand and overcapacity continuing to pose long-term challenges. Despite a sluggish macroeconomic environment and trade fluctuations caused by geopolitical and tariff disputes, major global plastic producers are still focusing on long-term opportunities, with emerging economies being highly anticipated.

The current plastic industry is indeed in a deep slump. According to the latest report from S&P Global Commodity Insights titled "Global Olefins and Polyolefins Outlook," global prices for polyethylene (PE) and polypropylene (PP) are still under pressure, with the market already entering the fourth year of a downturn cycle. Prices are expected to continue facing pressure in the coming years.

S&P Global pointed out that the global PE market remains oversupplied, but optimism is growing due to several plant shutdowns so far this year. The report states: "Some PE projects, such as Dow Chemical's Canada project, have been delayed for several years, which will also help accelerate the industry's recovery." Optimism also stems from emerging economies. PE demand in South Asia is expected to grow the fastest from 2024 to 2029, with a compound annual growth rate of 7.6%, followed by Southeast Asia at 5.1%. China's growth rate over the past decade was 6.5%, and it is expected to be slightly above 3.7% during the forecast period.

In the PP market, 2025 and 2026 will also mark the bottom after four years of significant price declines, and the market is unlikely to see any meaningful recovery before 2027. The report states that weak demand and increased capacity continue to depress prices, with the downward trend expected to persist at least until 2027. Despite the bearish outlook for PP, demand in 2024 still "moderately" grows by 3.6% to 95.7 million tons. Prior to the implementation of tariffs, the compound annual growth rate of PP demand was approximately 3.7%, with demand expected to rise to about 115 million tons by 2029.

Based on the current market situation, the short-term outlook for the virgin and recycled polymers market is challenging, with no significant improvement expected before the end of 2026. Several small recycling companies in Europe have already shut down due to insufficient funding, and larger enterprises have paused or canceled various plastic recycling projects due to insufficient economic returns. However, for those companies that can persevere and adopt long-term strategies, the industry still holds potential for sustained growth, mainly driven by the rising demand for polymers from the world's fastest-growing emerging economies.

Looking ahead, market participants believe that emerging economies will be an important growth area for the plastics industry.

Feng Shaohua, Director of Asia-Pacific Polyolefins at S&P Global Commodity Insights, pointed out that demographic trends and end-use industries will remain the core driving forces for polyolefin demand in the next 20 years. He analyzed that for companies capable of long-term planning, the industry growth prospects remain promising: the demand for polymers continues to expand in the fastest-growing emerging markets; the demand for composite materials required for clean energy sources such as wind and solar power is surging.

Market participants still believe that plastics will become an important downstream sector for the oil and gas industry. According to a report released by Bank of America in September, "Global plastic demand has doubled over the past two decades, becoming a major growth area in the oil and gas market." The International Energy Agency (IEA) also emphasized the driving trend of plastic demand for oil growth in a recent study. The IEA report stated that the use of oil-based plastic feedstocks will increase in 2024, with petrochemicals contributing to 75% of the net growth in global oil demand. It is expected that by 2030, the share of petrochemical feedstocks in crude oil consumption will rise from 15.8% to 17.4%. The report noted, "Plastic demand is driven by income and population growth, as well as technological advancements. Historically, global plastic demand has been closely correlated with global GDP, with year-on-year changes in consumption showing a strong linear relationship with year-on-year changes in GDP." Therefore, Bank of America has also identified emerging markets as the main growth driver for polymers.

Industrialized countries account for 12% of the world's population and currently account for 40% of global plastic demand. However, the report states that despite a 34% increase in plastic demand in the United States since 2000, consumption in emerging markets has soared by 177%. The Bank of America report states: "Compared to industrialized countries, this growth is related to faster GDP and population growth in these regions, with global GDP expected to grow by 3.0% to 3.1% from 2025 to 2026. As emerging markets continue to advance urbanization and industrialization, the gap in per capita plastic consumption between them and the United States and Europe may narrow."