Compounding is the process by which colour or additives are added to the basic thermoplastics material. This usually involves melting the thermoplastics material then mixing it with the required pigments and/or additive material in an extruder. The polymer melt is then extruded and chopped into pellets as it cools, which can then be used directly by the plastics processor. An associated process is masterbatch. This is where a high concentration of pigment and/or additives are dispersed in a carrier medium which can then be used directly by the processor in small quantities to pigment or modify the virgin polymer material. 

The thermoplastics compounding industry forms a vital interface between resin production and the plastics converter. Most processors require the polymers they use to be coloured or modified in some way (e.g. with the addition of additives such as flame retardants or UV light stabilisers) and in the case of PVC, all resin has to be compounded before it can be processed. Whilst a few very large processors carry out their own compounding, particularly PVC processors, the majority buy-in ready compounded material either direct from the polymer supplier or through an independent compounder. It is this “free” market, i.e. compounds sourced externally by the processor, which will be covered in this chapter.