Regional polymer supply represents 8% of the total GCC polymer production in 2019. Saudi Arabia, being the region’s leading producer and exporter, is also leading regional supply and consumption representing 96% of polymers supplied to regional converters. It is critical for other regional producers to pick up the pace and start looking at increasing local supply in an effort to increase self-sufficiency. The region’s major export hubs, China and India are already underway to self-sustain in certain polymers, reducing dependency on imports from the GCC and other parts of the world. This is an indicator to the GCC countries to reduce dependence on export markets and start investing in enhancing captive consumption.

Also, as regional demand for plastic products will continue to expand, companies with a primary focus on plastic polymers will start to move towards plastic conversion. At the same time, most GCC polymer producers lack the experience in developing plastic conversion and have little familiarity with diversifying products and developing close technical partnerships with consumers, which are essential factors for success in the plastic conversion industry – making the regional conversion industry a fragmented one.

Looking ahead, these factors are important and contribute to a critical need for GCC commodity producers to partner with, or acquire, plastic conversion companies in order to obtain strategic knowledge. The increasing demand for recycled products and increasing focus on the afterlife of plastic products will encourage integration even further – towards a circular economy for plastics.

Challenges and enablers in the plastic conversion industry

As the region has been associated with the image of crude oil dependency for decades, regional governments have been working to achieve economic diversification. This is evident through the considerable investment efforts and resources in this direction, through the formulation of transformation programs and industrialization objectives. However, the continued dominance of oil and inefficiencies of past initiatives have led to the discussion about underlying challenges that slow down these ambitious plans. Every GCC economy faces various domestic challenges, but which ones are the most troublesome for the plastic conversion industry. Some of the key challenges and enablers for the regional plastic conversion are listed in Figure 1.

Figure 1: Challenges and Enablers of GCC polymer conversion industry development

Source: GPCA Research and analysis, 2020

Circularity and plastic conversion

The plastics industry plays a crucial role in supporting sustainability and the circular economy concept in various sectors. Some of the most important contributions are in the transport, construction and food industries. Closing the loop in plastics can boost industry competitiveness and address climate change issues. In the context of plastics production and conversion, this means that plastics never become waste.

While the circular economy is still at a nascent stage, in many developed countries from which it originated, significant opportunities exist to adopt a more circular approach in the Arabian Gulf region. A move to a more circular approach can retain and increase value creation. It can also reduce our dependence on natural resources and achieve alignment with the GCC national visions of sustainable long-term growth (economic).

It can further play a key role in job creation, while improving the standard and quality of life and encouraging positive and behavioural change and a sense of responsibility within the community (social). A GPCA study conducted in 2018 estimated that for a 10,000 ton plastic mechanical recycling plant, between 27 and 32 new jobs can be created. It can also decrease waste generation, cut greenhouse gas emissions, and prevent waste leakage into marine and desert environments (environmental). With that, the GCC has accelerated the circular economy drive during 2020. Many reginal companies are already adopting circular innovation strategies, through new and innovative circular business models, to ensure the production of more sustainable materials and make sure manufacturers have access to them.

However, like any big transformation, adoption of the circular economy concept in the regional plastics industry is easier said than done. We are must be aware that the beginning of the will be a lot more difficult than we have imagined but still remains very critical. Businesses, governments and society need to be actively engaged and working in collaboration to bring about meaningful change.

The way forward 

As the plastics industry moves into a circular economy, players need to be aware of several important implications. A circular economy will require investments in new infrastructure – far beyond what is available today. A circular economy will open new business models and opportunities and will shift demand to more sustainable products. As this starts happening, companies will need to explore ways to collaborate more closely with stakeholders in the entire value chain, such as polymer producers, plastic converters, OEMs and recycling companies. A circular economy will happen only if it is economically feasible for stakeholders throughout the value chain.

This will not happen overnight and the transformation will take time. However, the plastics industry can always rely on its proven record to innovate, solve problems and create new opportunities. Therefore, plastics industry will be an important enabler for making progress towards circular economy not only on the industry level but towards the broader