Challenges for Vietnam plastic industry
During the pandemic, Vietnam plastic industry is one of the few industries in the group of industrial and consumer goods production that have high growth rates. Besides, the industry’s import and export turnover has increased despite facing a lot of challenges. However, Vietnam plastic industry has to deal with several difficulties and challenges resulting from a shortage of raw material supply, a slight rise in the price of some key materials, etc.
Domestic supply: Vietnam’s supply of raw plastic materials can only meet 4 (mainly PVC plastic beads) out of 30 types of primary plastic materials. These materials are the materials that Vietnam plastic industry uses annually. Therefore, the industry often has difficulty in producing raw plastic materials, especially PE resin which plays the most important role in the global plastic industry.
Source: VIRAC, GSO
Price of raw materials: Domestic PE price has been trending sideways since the beginning of 2021. In the first half of 2021, several international fluctuations have caused logistics costs to increase, which strongly affected PE price. Domestic PP price has significantly increased due to low supply. The reasons come from some major events: Domestic PP factory closed when Nghi Son Refinery and Petrochemical LLC encountered a power supply problem, Supply from Korean and Thai manufacturers decreased due to lack of raw materials, etc.
Source: VIRAC
Plastic products volume tends to increase
The two product lines that account for the largest proportion of the plastic industry are packaging plastics and household plastics. However, they have the lowest added value. Engineering plastics have high added value but only account for below one-fifth of the production structure.
Source: VIRAC, GSO, VPA
Domestic packaging plastics output has increased by 4.13% over the same period in 2020. These products mainly serve food and non-alcoholic beverage processing industries. Therefore, the growth of packaging plastic will depend on the growth of these two segments.
Construction plastics include uPVC pipes, HDPE, plastic doors, ceiling panels, furniture. The growth rate of this segment is expected to increase because the real estate market has recovered and the number of projects has increased. The main raw materials of these products are PVC, PP, and HDPE resins.
Engineering plastics are used in assembling cars, motorcycles, and electronic plastic equipment. It accounts for 15% of the production value of the end-product. Although the number of enterprises is quite modest, the output of this segment accounts for 20% of the total output of the whole industry.
Source: VIRAC, GSO, VPA
Unimpeded import and export of plastic materials and products through pandemic
Source: VIRAC, GSO
In the first 3 months of 2021, Vietnam’s imports of plastic materials have increased by 17% in volume and sharply by 38.4% in value over the same period in 2020. Import of PE and PP resins accounted for half of the total import. The import of PET, ABS, PE plastic materials has increased sharply.
Korea is one of Vietnam’s major plastic materials import partners. The import of raw PVC, PE, and PP resins from the Korean market greatly increases in terms of import volume.
Source: VIRAC, GDVC
In the first quarter of 2021, the export turnover of plastic products of Vietnam strongly increased by 33.5% over the same period in 2020.
Source: VIRAC, GSO, VPA
World news
USA: US plastic manufacturers especially for electronics, home repair, and personal protective equipment are forecasted to recover in 2021. Plastic manufacturers in automotive and aviation suffered the worst affection from the pandemic.
Europe: Economic stimulus package including 750 billion euros in cash and low-interest loans implemented. The EU will have to quickly implement stimulus packages and incorporate them into the EU industrial strategy in order to sustainably support the plastic industry.
China: In the next 5 years, China plans to invest in high-tech industries, benefiting plastic manufacturing especially engineering plastic and organic silicon.
