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Plastics

The South African plastics market is well developed throughout the plastics value chain and caters to both local demand and export markets. Generally, the leading markets for plastics are in packaging, building, construction and the automotive industries. However, a number of other industries which use some form of plastic are textile, electrical, electronic, mechanical engineering, and agricultural industries.

These industries have struggled to adjust to changes in the market due to a downturn in demand, rising tide of imports and competition from advanced developing countries. More so, cheap imports of relatively low added-value products are causing some parts of the world's plastics industry to restructure.

As a result, a number of companies have relocated their manufacturing facilities to low-cost production countries and had themselves become importers. The rising cost of the polymers used by the plastics conversion industry had made many of its customers resist the inevitable price increases that follow and led them to seek alternative sources of supply, wherever possible.

Plastics manufacturing in South Africa had contributed approximately 1.9% to GDP and 16.6% to the manufacturing sector. The largest contribution of plastic production is the plastic packaging market at approximately 53.5%. The export value of plastic products in 2017 was R 17.38 billion compared to the import value of R 33.06 billion leading to a trade deficit of R 15.67 billion.

Plastic consumption for 2017 in South Africa was 1.45 million tonnes, which indicates a per capita consumption of 28 kg. Included in the consumption figure is recycled plastic which contributed 334 727 tons of recycled input material in 2017. When compared to the recycling rate of 31.1% in Europe, South Africa has an input recycling rate of 43.7% for all plastics.

There are approximately 1 800 companies in the plastic converting industry employing around 60 000 workers. Annually on average 25 tonnes is converted by one worker.

Key barriers for growth in the plastics sector are skills shortage, slow technological upgrading as well as high competition from imports. Plastics engineers (beyond first degree) are reportedly not produced in a quantity that is sufficient for the growth of the industry.

Similarly, at an operations level, mould-setters and plant operators are also in short supply due to new competency demands arising from innovation and technological development. The availability of trained and experienced artisans remains of critical importance to the industry. Competitiveness of the local industry has been negatively impacted upon by factors such as the cost of polymers, proximity to markets, relatively small local and regional market, electricity pricing as well as inland location of production facilities in the case of exports. These challenges need to be mitigated in order to grow the domestic plastics market.

Variable Contribution in 2017
Manufacturing value-add R70bn(2017)
Manufacturing employment 60 000
Trade balance -R15.7bn

Constraints

Plastics conversion plants are generally small to medium-sized, with an average size of 130 employees. Many plants have fewer than 50 employees, and those with 400 or more employees are generally considered to be large. Constraints faced by the plastics sector include the following:

  • Import parity pricing of polymers;
  • Pricing of raw materials;
  • Relative small local and regional market;
  • Lack of advanced manufacturing practices;
  • Lack of downstream focus on R&D effort; and
  • South Africa's geographic position and resultant logistics costs.

Key Opportunities

Key areas of opportunity for growing sector include the following:

  • Automotive interior and exterior products;
  • Food packaging;
  • Medical products;
  • Buildings- pipes, flooring and building sheet; and
  • Electrical and electronics cables, appliances and casing components.
Facts about Plastics