PIA reports US plastic industry growth despite global economic troubles

09 Jan 2023 --- Despite last year’s global economic challenges, the Plastics Industry Association (PIA) is revealing that the US plastic industry is continuing to expand. In its recent publication, the organization reflects on the development of the sector in relation to its supply chains.

Plastic production and exports of plastic molds beat 2021 records, while the demand for plastics machinery and the industrial capacity in plastics materials and resin manufacturing experienced a decrease.

Furthermore, plastic production increased 3.9% between January and February – a 5.7% increase from February of the previous year. Production slowed thereafter, falling to 1.8% in November. The weaker plastics production in the latter half of the year is consistent with lower overall economic growth.

“The US economy had negative output growth in the first half of 2022. Persistent high inflation rates, rising interest rates and lower disposable income caused a pullback on consumer spending, particularly on interest-rate-sensitive goods,” says Dr. Perc Pineda, chief economist at the PIA.

“However, a significant portion of plastics production ends up in nondurable goods consumption, which remains stable regardless of where the economy is in the business cycle.”

Rubber and molds
Monthly shipments of plastics and rubber fluctuated in 2022 between US$22.1 billion and US$22.5 billion. The number of shipments peaked in April and then decreased.

The PIA announced that exports of molds for plastics fluctuated monthly between US$36.7 million in February to US$54.3 million in August.

The graph published by The Plastics Industry Association reveals growth in plastic product manufacturing.“Exports are usually the lowest during the summer months. However, exports of molds for plastics peaked in August before they decreased in the two months that followed,” says Dr. Pineda.

The report predicted exports of molds would average US$45.8 million monthly in 2022, which will be higher than the US$44.5 million in 2021.

“While export orders may have increased, lingering supply chain issues have caused longer production lead-time causing export shipments to slow. Moreover, a strengthening US dollar through November affected US export growth,” Pineda continues.

Even though the economy’s labor participation rate improved moderately from 61.7% in 2021 to 62.2% in 2022, the US plastics industry continued to experience labor supply constraints in 2022.

Hiring in plastic products manufacturing rose steadily in the first half of 2022 to 614.4 thousand, as the US Bureau of Labor Statistics estimated, but it slowed in the second half of 2022.

Plastics and resins
Plastic material and resin prices peaked in June of 2022 based on the Producer Price Index on plastics material and resin manufacturing, according to the US Bureau of Labor Statistics. The prices then “continued to fall since supply eventually caught up with rising demand.”

The industrial capacity in plastics materials and resin manufacturing in the US increased in 2022. However, capacity was expected to increase by 1.9% in 2022 – lower than the 7.1% capacity increase in 2021.

“Lower growth rates in industrial capacity against the backdrop of falling resin prices suggest that there is sufficient plastics material and resin supply,” adds Pineda.

Machinery decline
Pineda expected that imports of US plastics machinery in 2022 would be less than 2021 based on the demand for plastics machinery softening in 2022 – a reversal from the strong need the preceding year.

In March, the underlying trend in US plastics machinery imports was downward sloping. Last year’s imports were hypothesized to average US$150.3 million per month, which would be 51.5% lower than last year’s monthly average.

“Higher interest rates have slowed capital expenditures, particularly on industrial equipment investment spending.”

“Even with a strong US dollar in recent months, which is a boon for imports, the slowdown in plastic products manufacturing, against the backdrop of a weaker macroeconomic outlook, negates the demand for higher imports of equipment,” Pineda concludes.

Edited by Sabine Waldeck

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