New product advances are providing plastic pipe manufacturers with clear-cut opportunities to eat into the market share of traditional pipe materials. A new study by Frost & Sullivan, the international marketing consulting company, reveals how product development is fast changing the extent and type of plastic usage within the pipe industry.
Frost & Sullivan forecast that total revenue will rise from US$2.23 billion in 1999 to US$2.61 billion by 2006. A compound annual growth rate of 2.3 per cent is projected for the period.
Plastics are making significant inroads into traditional material usage within the pipe industry. High penetration rates are particularly common within the soil, waste and sewage markets. In turn, low product awareness within the under-floor heating market points towards definite opportunity within this area.
Product development is proving a key feature of numerous market segments, with non-PVC plastics making the greatest advances. Superior grades of polypropylene polymers are not only encroaching on traditional material usage, but they are also acquiring market share from the historically dominant PVC plastics.
The principal sector is the PVC pipe market, a position reflected in a 53.8 per cent market revenue share in 1999. All sectors will benefit from the moves to replace PVC products, with polybutylene and polypropolene sectors witnessing the most advanced growth. Polybutylene will be the fastest growing polymer sector, albeit from a very low base, with projected annual average growth rates in excess of 15 per cent for the forecast period.
PVC’s role as the leading sector will be challenged by the growth of other segments, however, opportunity will remain for PVC manufacturers.
Frost & Sullivan Senior Industry Analyst, David Platt, comments: ‘Technological developments will play a crucial role in enabling PVC to challenge the upsurge in competition. The introduction of molecular orientated PVC will provide a real opportunity to challenge new advanced polymer products.’
The largest PVC suppliers within the market include EVC, Solvin, and Vinnolit. The tendency is for these manufacturers to solely supply PVC based products the exceptions being Solvay and ElfTotalFina, who market both polyolefins and PVC products. The largest suppliers of polyolefins are Borealis, Elenac and Montell. The number of actual plastic manufacturers has markedly declined in recent years, a result of the spiralling number of mergers and acquisitions.
Accelerating consolidation amongst plastic pipe manufacturers is generating greater bargaining power for these parties. The industry is witnessing an increasing degree of market concentration, with the top five companies accounting for nearly 40 per cent of all European production.
In conclusion, the replacement of traditional materials and continued product development is driving the market forward. However, traditional materials continue to pose a threat as they limit market penetration for plastic materials.
Broadening of the product base and development of new applications are the two key strategic recommendations highlighted within the study.
David Platt comments: The consolidation that is taking place in the European plastic pipe market means that there are larger and more powerful buyers in the market. The pressure to reduce costs has meant that the pipe manufacturers tend to do business with fewer suppliers. It is therefore becoming more important for resin suppliers to offer a broad range of polymer types and grades for many different pipe applications.