Vietnam’s plastic industry report quarter 2 of 2023: Overview and trends of plastic production and consumption in Vietnam

As reported by VIRAC, Vietnam’s plastic industry in the first months of the year was quite gloomy due to the influence of global macroeconomics. Plastic production and consumption both decreased compared to the same period in 2022.




Vietnam’s plastic industry is placed in an unfavorable macroeconomic context


Gross domestic product is lower than every year. GDP in the first six months of 2023 increased by 3.72%; this rate is quite low compared to GDP growth in the same period in the period 2011 – 2023. Policies to stimulate domestic consumption, tourism promotion and promotion activities have been promoted that have contributed to maintaining the growth of the service sector in the past six months.


The industrial production index increased slightly. Industrial production in the first six months of 2023 faces many difficulties when demand is weak and input costs increase while the number of orders decreases.


The CPI in the first six months of the year increased by 3.29% over the same period last year. The education sector increased tuition again, rising housing prices along with an increase in the price of input materials led to an increase in CPI. The average decrease in domestic gasoline prices has restrained the growth rate of the CPI.


The growth rate of total retail sales of goods and consumer service revenue in the first six months of 2023 shows signs of deceleration compared to the same period last year.


The data above shows us a rather gloomy macroeconomic picture. All economic indicators have only increased slightly and have not recovered to pre-pandemic levels. The plastic industry will suffer certain impacts when placed in the current macroeconomic situation.


Overview of Vietnam plastic industry

Energy supply for plastics industry production in Vietnam is maintained stably:


Coal – domestic supply recovered, while supply from imports decreased significantly

Image 1: Vietnam's plastic industry coal supply
                                                                     Image 1: Vietnam’s coal supply

Source: VIRAC


There are many coal resources, but our country still imports them in larger amounts than from abroad. This causes domestic coal prices to be influenced by world coal prices. It is expected that global coal prices will cool down because demand for coal in other markets is decreasing.


EU countries are aiming to reduce energy consumption, as most EU members report a drop in electricity demand of more than 5% in 2023. Domestic coal prices increased in April 2023 although previously they had been maintained stable. However, with world coal prices being low, the country’s coal supply remains stable.


Another source of energy needed for the plastic industry is electricity.

Image 2: Vietnam's plastic industry Average total electricity market price
                                                         Image 2: Average total electricity market price

Source: VIRAC


The average electricity price in the first six months of 2023 is high and has affected plastic production activities. The full market price (FMP) in the competitive electricity market increased mainly due to the increased mobilization rate of high-cost thermal power sources. Currently, competitive electricity prices are still being mobilized according to the 2022 Electricity Market Operation Plan of the Ministry of Industry and Trade.


Therefore, the System Marginal Price (SMP) continues to be high, supporting the thermal power group. In the last months of the year, it is forecast that electricity prices will remain high due to the high input prices of coal and gas. However, electricity output is guaranteed by supply from hydropower and wind power, while demand has not increased.


Production and consumption of raw plastic (primary plastic) of Vietnam’s plastic industry


Raw plastic (or primary plastic) is plastic resin produced from the distillation of petroleum, unused, unmixed with impurities and without additives, and has a natural white color. When putting plastic beads into use, you can add different coloring beads to get the desired color. Currently, common types of primary plastics are: PE, PP, ABS, PA, POM, PVC, PET, PC, etc. 


Production of raw/primary plastics in Vietnam has generally decreased.


According to VIRAC’s report, production of virgin plastic resins in the first six months of 2023 decreased by x% compared to the same period in 2022. The product with the deepest decrease is PE, down -x% compared to the same period in 2022. Products with good growth, especially PVC, had an increase of +x% compared to the previous year.

Image 3: Output of primary plastic resins by quarter
                                                          Image 3: Output of primary plastic resins by quarter

Source: VIRAC


Imports of virgin plastic resins in the first six months of the year also recorded a decrease in quantity and price.


According to VIRAC, importing clear plastic in the first six months of 2023 decreased by x% compared to the same period in 2022 in volume. Imports also decreased by x% in turnover. The average import price for the quarter reached 1,494 USD/ton, down x% over the same period last year.

Image 4: Import volume of plastic raw materials by month
                                                    Image 4: Import volume of plastic raw materials by month

Source: VIRAC


The export of virgin plastic in Vietnam is still at a low level. The reason for this is that our country’s plastic production level is lower than that of developed countries, depending on imported plastic from abroad, so few products are brought internationally. Only a few Vietnamese plastic manufacturing enterprises have enough production output to export abroad.


In VIRAC’s report, there is complete information about the proportion of import-export turnover and top exporting enterprises of each type of virgin plastic resin:


Production and consumption of finished plastic products in Vietnam’s plastic industry:


Domestic production of finished plastic products decreased sharply. The reason for this is that the domestic supply of plastic raw materials increases but still depends on imports. The value of domestic finished plastic production reached x (trillion VND). Construction plastic is the main product among Vietnam’s plastic products, accounting for x% of total output; the second is the plate, and inclined surface made of plastic accounts for x%; packaging plastic, which accounts for x%; and other plastics account for x%.

Image 5: Structure of plastic product production value by type, first 6 months of 2023
                              Image 5: Structure of plastic product production value by type, first 6 months of 2023

Source: VIRAC


Import of finished plastic products: Import turnover of plastic products in the first 6 months of 2023 reached x billion USD, down x% compared to the same period in 2022. Most import markets declined sharply. Germany and India are the only two markets with growing turnover, with growth rates of x% and y%, respectively.


Export of finished plastic products: export of plastic products in the first 6 months of 2023 decreased by x% compared to the same period in 2022. The cause of this decrease is due to: High global inflation, especially difficult economic conditions in large markets such as the EU and US, caused export turnover of plastic products to decrease sharply.

Image 6: Export turnover of plastic products
                                                                 Image 6: Export turnover of plastic products

Source: VIRAC


Development trend of the Vietnam plastic industry

General development trend: Towards developing the green plastic industry in a circular economy.


The plastic industry is an important economic sector and a link in many production value chains. The importance of plastic in the economic development of each country cannot be denied. However, we also need to be aware of the harmful effects of plastic and the plastic industry on the environment. In particular, plastic waste is still a problem for the whole world in general and Vietnam in particular. To aim for the sustainable development of Vietnam’s economy, the plastic industry also places itself in a circular economy, towards green development.


According to the Vietnam Plastic Industry Development Plan with a vision to 2025 of the Ministry of Industry and Trade, the plastic industry must shift its structure in the direction of gradually reducing the proportion of product groups with short lifespans and increasing the proportion of product groups with long lifespans. Typically, the reduction in the production of packaging and household plastics increases the production of construction material plastics and engineering plastics with special physical and mechanical properties used in construction labor industrial processes and activities.


This trend requires a combination of many departments and businesses. Currently, the business and production models of the plastic industry are still in linear, communication models. With the economy gradually changing, the plastic industry needs pioneering changes to keep up with the trends of the times. The new plastic industry can contribute to the sustainable development of Vietnam’s economy and bring long-term profits to businesses.


Development trends of each product in the plastic industry

Development trend of plastic packaging.


The demand for output products of packaging plastic will depend on people’s income and spending.

Image 7: Forecast of plastic production output
                                                    Image 7: Forecast of plastic production output

Source: VIRAC


From the chart above, it shows that there is a positive correlation between consumption and GDP. This growth leads to bright prospects for the beverage consumption industry. Thanks to that, supporting industries such as packaging plastics will have opportunities to develop. However, following the general trend of green development, the packaging of products is gradually switching to more environmentally friendly types, so in the long term this product group will lose its market share.


The plastic packaging trend that is predicted to be popular in the future is the trend of minimalism and reuse. The trend of minimalist packaging not only helps products become luxurious and stand out among other colorful products, but also makes recycling these types of packaging easier. This will make recycling and environmental protection easier.


A trend is predicted to grow in the future is the use of high-quality sustainable packaging for reuse many times. The extended lifespan of the product also partly reduces the burden on the environment.


Development trend of engineering plastics


Plastic is also an important part of technical equipment. The trend of growth in the engineering plastics segment depends mainly on the automobile industry and the electrical and electronics industry. The auto industry is expected to still face difficulties due to the global chip shortage. However, the trend of using electric vehicles is expected to be the main growth driver for the technical plastics segment in the long term. Engineering plastic components help reduce vehicle weight and limit energy consumption.


The electrical and electronics industry is also a bright prospect for the domestic electrical and electronics industry in general and the plastic industry in particular. This industry is forecast to grow in the near future when the Government supports policies to attract FDI investment such as tax incentives, creating a more favorable environment for investment in technology development.


At the same time, large corporations in the industry are planning to move or restructure production chains towards “China +1”. It is expected that Vietnam (geographical location near China) will be an attractive investment destination in the policy of diversifying the global supply chain and production.



The above information is summarized in “Plastic industry report Q2/2023”. The report provides complete information on macroeconomics, trade supply and demand of the plastics industry. Besides, the report also has information on forecasts and prospects of the plastic industry with the latest updated information.




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