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Report Forecasts Robust Growth for Plastics IndustryReport Forecasts Robust Growth for Plastics Industry
The good news: Plastics manufacturing is now projected to increase by 5% this year, according to a new report from the Plastics Industry Association. The bad news: Resin prices will continue to rise.
July 21, 2021
The US plastics industry continues to grow. According to the Q2 Plastics Industry Outlook released by the Plastics Industry Association (PLASTICS), plastics manufacturing is now projected to increase by 5.0% this year. Plastics machinery and production molds are revised upward to increase by 12.6% and 4.6%, respectively, said the PLASTICS report. “This year’s production of plastic materials and resins could decrease by 2.9% and increase by 8.2% next year,” the report also noted.
Plastic materials and resins saw a 6% decrease in Q1. That is expected to improve, although output will be less than last year, PLASTICS projects. Production in Q2 and Q3, respectively, could be 1.1% and 0.6% lower than a year earlier. Production will likely be 3.6% lower in Q4 compared with last year’s production ramp up of 13.5%. Holding back plastic production in 2021 are the broad-based supply-chain difficulties, which could result in lower production by 2.9% in 2021. However, as the economy continues to recover in 2022, production could increase by 9.2%, starting with a 12.2% increase in Q1 and a 9.5% increase in Q2, projects the PLASTICS Q2 report.
Higher resin prices will remain throughout 2021.
Processors have been complaining about the increase in resin prices, which isn’t making their customers happy, but they shouldn’t hope for any relief. PLASTICS said that “higher prices due to plastic materials and resin scarcity along with strong demand are now projected to remain throughout 2021.” Comparing this year’s Q2 and Q3 with last year is enough to make processors choke on their coffee: In Q1 and Q2, prices were 14.1% and 25.9% higher than a year ago, respectively.
The only good news the PLASTICS report has to offer is that the rate of price increases will start to slow this year at 23.2% in Q3 and 17.0% in Q4, leaving resin prices 19.9% above last year on an annual basis. Some relief is expected to come in 2022, with resin prices projected to increase a modest 3.1% in Q1 and 2.5% in Q2.
Plastic products manufacturing rose by 12.5% in Q2 following a 0.1% decrease in Q1. Production is expected to increase by 5.0% in Q3 and by 3.2% in Q4, said the report. “That brings a production increase of 5.0% this year,” said PLASTICS, “and it is expected that production will continue to increase by 3.3%. The moderate production forecast in 2022 is in sync with the overall economic growth that will most likely slow after this year’s bounce back from the pandemic.” The increase in production is also projected to bring an increase in employment in the sector, the report noted.
Plastics machinery production forecast to rise 12.6% this year.
As for plastics machinery, increased production should bode well for this sector. Plastics machinery production rose by 11.2% in Q1 and 21.7% in Q2, but these rates are “magnified in comparison to the lows in Q1 and Q2 last year,” the report noted. “It is now projected that [machinery] production could increase by 10.2% and 8.2% in Q3 and Q4, respectively. Annually, a 12.6% increase in plastics machinery is expected this year but could slow to 0.4% in 2022.”
An increase in machinery production won’t help much in the employment picture, however, as the industry “will continue to experience a tight labor supply this year,” said PLASTICS.
Although production of industrial molds decreased 2.1% in Q1, Q2 production increased by 11.6%, and further increases are expected — 5.5% in Q3 and 4.2% in Q4. Employment in mold manufacturing is projected to have increased by 1.4% in Q2, after a slight decrease in Q1. “The producer price index for industrial molds is now expected to increase this year by 0.5%," said the report. “The next year’s 0.7% increase forecast is unchanged. Quarterly price index changes are still expected to remain on the low side this year and next year. Following a 0.5% decrease in Q1 and no change in Q2, Q3 and Q4 could see 1.2% and 1.3% price increases respectively. The price index in 2022 is currently projected to increase 0.9% in Q1 and 0.8% in Q2.”
The full report can be downloaded from the PLASTICS website. It is free to PLASTICS members and available for purchase by non-members.
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