Emilios Margaritis Date (12/2008)

Greece: Plastics Market Page 1 of 6 Emilios Margaritis Date (12/2008) Summary Greece is among Europe's most promising emerging market for plastics, with an estimated market volume of $9 billion by 2015. The plastics market in Greece, expected to increase in the next three-five years, is a dynamic sector of the Greek economy as it serves most industries, and has experienced unprecedented growth in recent years due to the massive investments. Plastics in Greece appear in many sectors such as construction, energy, health care-medicine, electronics, engineering- commercial sectors, in everyday life. The demand for plastic products in Greece increases by six percent annually according to the data of the Association of Hellenic Plastics (AHP). For the last decade the consumption of plastic products into the Greek market is consistently above the average of the processing industry worldwide. Total Imports of plastics for Greece were $6 billion and total exports were $1.5 billion for 2007. Domestic production of plastics in Greece is lower than the average European production rate. For the years 2007-2008, the rate has increased around 0.1 percent, while in Western Europe it was approximately 4 percent annually. This fact explains the high number of imports into Greece in the plastics industry. The Third European Union (E.U.) Community Support Framework Program (III CSF), and the upcoming program, have and will continue to financially support the increased usage of plastics in the Greek market. Producers of plastics raw materials as well as manufacturers of production equipment, have major opportunities in the Greek market. Market Demand All type of customers prefers to have regular suppliers, since they are familiar with the behavior of the materials. Personal relations and contacts with customers are very important. Most customers request various documents for engineering grades, such as data sheets, ISO certificates, and analysis certificates. Specifications of the materials (melt index, flammability, impact, RAL no color) and guarantee of the quality is required, even for reprocessed engineering plastics. Most customers of recycled materials usually order around 20 metrictons per month, and they prefer to deal with domestic traders they know, in order to provide them, guarantees for the quality and long credit terms (120 days). Table 4 shows the orders of different types of commodity plastics in Greece on a monthly basis for 2007. Customers Prime Recycled Engineering Commodity Small 2-10 MT/mth - 1-2 MT/mth Medium 50-100 20MT/mth 3-8 MT/mth MT/mth Big 100-300MT/mth - 8-15 MT/mth

of 6 Market Data The Greek Market for Plastic Materials In Millions of U.S. dollars 2006 2007 2008 Total Market Size 4.450 4.650 5.200 Total Local Production 100 150 200 Total Exports 1.400 1.500 1.700 Total Imports 5.050 6.000 6.700 Imports from the U.S. 12 15 18 The above statistics are unofficial estimates. The plastics sector is one of the fast growing sectors in Greece. New orders in that sector have increased by 11.4 percent during the January-July 2008 period. More than 60,000 tons of plastic bags are consumed each year in Greece. There are also very good sales prospects for PVC products. However, Greece has one of the lowest rates in Europe for plastics recycling. According to E.U. obligations, the Government of Greece has to recycle more than 60 percent of plastic material by the end of 2011. The development of the plastics sector depends directly on the development of the petrochemical sector and related imports. Greece will receive about $32 billion from the E.U. IV CSF for as well as the remaining amount of the III CSF, which is expected to guarantee a high rate growth for the Greek Economy, of which around $2 billion for projects in the private sector will be used for the construction of new factories and commercial buildings for the periods 2008-2012. There are three main categories of plastics in Greece: Prime commodity Recycled commodity, and Engineering plastics. Prime commodity plastics which are produced by the three domestic petrochemical plants in Greece, EKO, a Greek public interest company producing PVC & PP; DOW a U.S. affiliate company producing PS: and VPI producing PET, a joint venture between EKO and 3E, the distributor of Coca Cola for Eastern Europe. Due to the fact that there are few domestic plastics companies in Greece, a big part of the market demand is covered by imports of prime commodity plastics. Table 1 below includes imports of prime commodity plastics raw material 2007. Material 2007 Volume (kg/year) HDPE 117.286 LDPE 106.628 LLPDE 23.351 PP 50.331 PET 8.633 PVC 39.571 Each type of polymers (HDPE, LDPE, PP etc) in the table above refers to total imports of that type.

of 6 There is no domestic production of PE, so imports are equal to the total consumption. EKO plant produces PVC & PP, so consumption of those polymers is higher than import volumes. Recycled commodity plastics are a significant part of the Greek plastics market. Table 2: shows the potential of types of recycled plastics materials in 2007. Material 2007 Volume [ Metric Tons] HDPE repro 11.700 LDPE repro 10.300 PE regrind 4.500 PE scrap 4.400 PP repro 2.800 PS repro 3.800 Engineering plastics. The potential of the Greek market for engineering grades is limited, but the estimation is that it will increase significant. There is no domestic production of engineering plastics. The largest volumes of imported engineering plastics are PA (almost double from the second ABS type) Table 3: shows the potential of types of engineering plastics in 2007 Material 2007 Volume [ Metric Tons] PA 6 and PA 66 2.499 Other PA 1.605 ABS 1.741 PC 4.127 POM 601 SAN 276.387 Best Prospects U.S. suppliers of plastics materials and equipment enjoy an excellent reputation for quality and low maintenance in Greece. In particular, U.S. firms will find excellent sales opportunities for the above categories of raw/prime materials. All materials/products imported into Greece must be produce/manufactured according to E.U. specifications, and meet E.U. environmental and safety requirements. U.S. firms will also find excellent market potential in consulting and engineering services for the design, construction and management of new plastics products. Additional opportunities for the organization, installation, inspection, operation and maintenance of plastics installations are available for U.S. firms. Agreements for the transfer of manufacturing technology for plastics and joint venture or licensing arrangements for the local production of plastics including accessories, and automation instrumentation, also have excellent sales prospects in Greece. Competitive analysis Domestic Production All major manufactures have started to upgrade their products to E.U. standards. There are three main petrochemical plants in Greece, EKO, DOW and VPI and they all depend considerably on imports of raw material

of 6 for the production of their equipment. This is significant as raw material costs are the highest of the production costs. In Greece there are about 11 local recyclers. Most of them are also producers who sell reprocessed materials of their production to other customers. There is no domestic production for engineering plastics. There are only maintenance companies which are dealing with installation and servicing of machinery and equipment in Greece. Third Country Imports The main suppliers of the Greek market for prime commodity materials and plastics are mainly Western European producers such as Polimery Europa, also known as Enichem, Italy, and Elenac, also known as Montell, that are operating through their own branch offices in Greece. Some of these firms use exclusive agents or traders like FINA and HIP-PETROHEMIJA (Serbia origin) that are responsible for selling the materials to end users and smaller traders. Table 5 below shows the market share hold by E.U. origin suppliers in comparison with third counties origin suppliers in 2007. 2007 Imports from E.U. Imports from other Material (Market share percent) countries (Market share percent HDPE 95.03 4.97 LDPE 97.47 2.53 ABS 47.59 52.41 PP 99.15 0.85 PC 92.72 7.28 Bulgaria holds a big market share in Greece of imported recycled commodity plastics and recycled materials. The reason is low prices and low trucking costs to Greece. Other countries with strong presentation in Greek recycled plastics market are Cyprus, Italy, Belgium, Netherlands and Germany. Cyprus, Eastern Europe, Middle East and North Africa countries are the markets that Greek companies export their plastics products. The main suppliers to the Greek market for engineering plastics are mainly Western European primary producers; the biggest being BAYER, ABS (Novodur type P2H-AT), and PC (brand name Makrolon). Other Western European suppliers are BASF, DOW and General Electric Europe. The main PA suppliers are French and Italian companies. Table 6 below shows the market share of E.U. origin suppliers of engineering plastics in comparison with third country-origin suppliers in 2007. 2007 Imports from E.U. Material (Market share percent ) Imports from other countries (Market share percent ) PA 6 & 96 4 PA66 Other PA 70 30 ABS 79 21 PC 99 1 POM 86 4 SAN 77 23

of 6 U.S. Market Position All major U.S. plastics materials manufacturing companies are represented in Greece. In addition, several major Greek companies/consortia involved in the plastics sector have utilized the expertise of U.S. firms as consultants and equipment suppliers. End-User Analysis Greece has historically regarded the United States as the world leader in technology and looks to U.S. firms for innovative new products, services and equipment. U.S. plastics raw materials, machinery and equipment are known in Greece for high quality and durability, and enjoy an excellent reputation. Price, proximity and strong after sales service are major criteria for the final selection. Consequently, there are opportunities for U.S. firms interested in technical collaboration or joint ventures to produce fully completed products in Greece. U.S. firms adopting such an approach will have the best prospects for enhancing their market share. Market Access Import Climate There are no restrictions or non-tariff barriers on imports of plastics raw materials in Greece. As a full member of the E.U., Greece applies the common E.U. external tariff schedule to products imported from non-e.u. countries. Import duties for non-e.u. products are 3.5 percent. All products, regardless of origin, (foreign and domestic), are subject to the Value Added Tax, (VAT), of 19 percent. The VAT on non-e.u. products is applied to the total CIF value plus the import duty. All imported plastics materials and equipment must conform to E.U. standards. This means that plastics materials, products being shipped into Greece must conform to E.U. Regulations. CE Mark, UCL and TUV certificates are essential for plastics equipment. Financing Credit and financing are critical to successfully doing business in Greece. Fortunately, the import payment process is similar to that used in the rest of Europe, such as cash against documents, sight drafts, time drafts, and irrevocable letters of credit. Greek banks also have extensive correspondent relationships with U.S. banks. Citicorp, Bank of America, and American Express all have offices in Athens that can assist U.S. firms. U.S. exporters, however, should be aware that letters of credit are very expensive in Greece. Greek banks usually require the cash equivalent on deposit before issuing any guarantees. In a country where working capital loans carry high interest rates, this creates a heavy economic burden for the importer. Therefore, Greek businesses often seek extended credit terms of 60-90 days or longer from their suppliers. U.S. suppliers unfamiliar with these practices and expenses, or who require more stringent payment terms may make their U.S. products less competitive. Incentive Policies Greek policy concerning investment activity is governed by a number of laws which establish a variety of financing mechanisms and incentives for investors in the public and private sectors. These incentives include: Third and Fourth Community Support Framework Funds for new factories and commercial buildings; Grants for new investments in infrastructure and industries; Subsidies; Tax-free allowances; Extra depreciation rates; Lower social security contributions; and favorable tax rates. Trade Events EXPOLINK 2009: April 2-5, 2009. 2nd International Exhibition of Graphic Arts, Packaging and Promotion at the International Exhibitional Center in Thessaloniki. http://www.expolink-fair.gr/2009/english/eisagwgi.htm

of 6 Resources & Contacts Trade Associations Association of Hellenic Plastics 66 Michalakopoulou Street, GR-115 28 Athens, Greece Tel: 30 210-779 4519, Fax: 30 210-779 4518 Contact: Mrs. Vivi Kousidou, Executive Secretary, E-mail: info@ahpi.gr Website: www.ahpi.gr Federation of Greek Indusytries (SEV) 13 Xenophontos Street, GR-106 71 Athens, Greece Tel: 30/210/323-7325-9, Fax: 30/210/323-7245 Contact: Mr. George Daskalopoulos, President E-mail: main@fgi.org.gr Specialized Publications Plastika Bimonthly magazine, published by the Association of Hellenic Plastics 66 Michalakopoulou Street, GR-115 28 Athens, Greece Tel: 30 210-779 4519, Fax: 30 210-779 4518 Contact: Mrs. Vivi Kousidou, Executive Secretary, E-mail: info@ahpi.gr Mechanical Engineers Monthly Technical Review Monthly magazine, published by the Association of Mechanical Engineers 49 Vouliagmenis Street, GR-116 36 Athens, Greece Tel: 30/1/923-5487, Fax: 30/1/922-2743. Contact: Mr. Vaios Selountos, President, E-mail: tep1@enternet.gr For More Information The U.S. Commercial Service in Athens, Greece can be contacted via e-mail at: Emilios.Margaritis@mail.doc.gov ; Phone: +30 210 720 2325; Fax: +30 210 721 8660; or visit our website: www.buyusa.gov/greece/en The U.S. Commercial Service Your Global Business Partner With its network of offices across the United States and in more than 80 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://www./. Disclaimer: The information provided in this report is intended to be of assistance to U.S. exporters. While we make every effort to ensure its accuracy, neither the United States government nor any of its employees make any representation as to the accuracy or completeness of information in this or any other United States government document. Readers are advised to independently verify any information prior to reliance thereon. The information provided in this report does not constitute legal advice. International copyright, U.S. Department of Commerce, 2009. All rights reserved outside of the United States.