Plastics Processors Moving Forward with ‘Backward Integration’ in Compounding Industry

December 02, 2015

Wellesley, Mass., December 02, 2015 – Compounding by processors should grow at a faster rate than that by producers or independent compounders. BCC Research reveals in its new report that “backward integration” is aiding this trend.

This study analyzes mostly large-volume commodity resins produced from petrochemical feedstocks, which includes familiar resins and resin families. This study also reviews some specialty engineering resins such as polyamides (nylons) and polycarbonate. Lastly, some newer biopolymers made from biological instead of petrochemical feedstocks, as well as thermoplastic elastomers, are discussed.

Thecompounding of plastic resins is the addition of other materials to neat resins in order to add desirable properties or to make them more processable. The market comprises resin producers, processors, and independent compounders.

The North American market for thermoplastic compounds is projected to grow from 88.78 billion pounds in 2015 to 100.2 billion pounds by 2020, reflecting a five-year compound annual growth rate (CAGR) of 2.4%.  The resin producers segment, the largest type of compounder, is expected to grow at a five-year CAGR of 2% to reach 56.3 billion pounds in 2020. The processors segment, the fastest growing type of compounder with a projected five-year CAGR of 3.1%, also is the second-largest market.

The trend for resin producers to compound internally should remain relatively stable, and with lower growth than processors or independents. The trend for processors to compound fillers should continue as prices remain stable and relatively high for major polyolefins. The independent compounding group includes several types, including proprietary, custom, toll and concentrate compounders. Independent compounders should assume a more technical role as markets evolve and importers begin playing a larger role in the polyolefins and other commodity markets.

“One of the major industry-wide trends in the compounding business, which is also occurring in other aspects of the plastics industry, is backward integration. By doing this, a company can reduce the number of operations in the production chain,” says BCC Research analyst J. Charles Forman. “In this system, plastics processors buy basic materials (neat resin), place these materials into the compounding system, then directly into molding or extrusion machines, streamlining the actual compounding step. With the continuing acquisition of smaller companies by larger ones, the average internal compounding capacity of these large processors will eventually become larger for many plastic products.”

The Plastics Compounding Market (PLS018E) examines thermoplastic compounds by type of compounder. The report identifies major resin producers, key plastics processors, and independent compounders, along with activities and product lines. Applications and markets by pounds or in dollars for 2014, 2015, along with a 5-year forecast to 2020 also are provided.

Editors and reporters who wish to speak with the analyst should contact Steven Cumming at

The Plastics Compounding Market( PLS018E )
Publish Date: Nov 2015    

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