U.S. plastics industry maintains a trade surplus

In a country that tallied a $43.5 billion trade deficit October, which was actually smaller than September's gap of $44.2 billion, the plastics industry can make the rare claim of exporting more goods and services than it imports. As of October, the U.S. plastics industry's trade surplus had reached $14 billion, and was closing in on 2010's total surplus of $16.2 billion.

Bill Carteaux, Society of the Plastics Industry (SPI) president and CEO, and Michael Taylor, senior director of international trade, presented those findings and more during a Dec. 15 webinar, noting that productivity gains, a weaker dollar, and suddenly cheap and abundant natural gas had propelled overseas business, with resin exports leading the way.

Carteaux noted that when his tenure at SPI began in 2005, the U.S. Congress was in the midst of hammering out that year's energy bill under the shadow of natural gas priced as high as $14/mm BTUs. On Dec. 16, the Henry Hub spot price for natural gas stood at $3.05/mm BTU, by contrast, with the U.S. currently boasting the lowest production costs for resins outside the Middle East.

"[In 2005], CMAI was forecasting that the U.S. would be a net importer of resin by 2010 or 2011," Carteaux said, noting the market shift, adding that, "natural gas prices have certainly been a boon for the industry."

Good trade makes good neighbors

Proximity and a free trade agreement helped Mexico and Canada maintain their status as America's most important plastics-trading partners, with U.S. plastics companies exporting $11.3 billion to Mexico and $11 billion to Canada. China comes in third place, with exports there expanding by 11%, followed by Belgium (exports up 35%) and Japan (exports up 47%).

That heady export growth was tops in 2010, followed only by:

1. South Korea (+44.3%)
2. Taiwan (+39.8%)
3. Brazil (+36.7%)
4. Belgium (+34.7%)
5. Germany (+29.8%)

Mind the gap

China also maintains the largest plastics trade gap with the U.S., with the total trade deficit tallying $5 billion in 2010. That's in spite of the fact that China in 2010 was the U.S.'s third largest export destination for its four major product categories, including resin ($3.6 billion), plastic products ($1.1 billion), machinery ($125.7 million), and molds ($13.1 million).

In 2010, the U.S. imported $37 billion worth of goods from those same product categories, with Canada and Germany leading the way in the import of resins, machinery, and molds, while China exported $7.9 billion in plastics products to the U.S. in 2010, which was actually down from $8.4 billion in 2007.

New free trade agreements

Carteaux and Taylor highlighted the recently approved free trade agreements with South Korea, Panama and Colombia, noting the U.S. plastics industry currently enjoys trade surpluses with all three nations that SPI feels will only become larger as tariffs against products, materials, molds and machines slip away.

In 2010, the U.S. posted a $118 million trade surplus with South Korea, and an even larger, $446 million trade surplus, with Colombia. The U.S. had a trade surplus of $95 million with Panama in 2010, a country that has seen its imports from the U.S. plastics industry jump by 107% since 2000.

The SPI placed passage of the free trade agreements very high on its legislative agenda in 2011, and hailed their signing, although some sectors of the industry were less enthused. Taylor took pains to lay out the potential positive impact of the agreements, noting that of the 17 countries the U.S. currently has a trade pact with, it maintains a surplus with all of them in manufacturing. He also noted that with 10 days of implementing its free trade pact with South Korea, the European Union saw its trade with the Asian country immediately increase.