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US' Tariffs Begin for China-made Machinery

Plastics processing machinery falls under President Donald Trump's additional 25 percent tariffs spanning $34 billion worth of goods from China that began July 6, but officials of injection press importers say not to expect an immediate price jump, since they have machines in stock at U.S. facilities.However, executives are concerned about what a prolonged trade war could do to the larger economy. A trade-conflict-driven downturn in automotive, an important market segment for plastics machinery, would damage the equipment sector, they said.Trump has proposed tariffs of up to 25 percent on foreign cars and trucks. General Motors Co. and other automakers have warned that tariffs could significantly raise prices of cars sold in the United States, reduce sales and cut jobs.And while those tariffs remain up in the air, China has retaliated by launching its own tariffs covering agricultural products, autos and other products on July 6."It's all connected, at least in my mind. I'm a little more concerned about what happens on the macroeconomic scale," said John Beary, president of Yizumi-HPM Corp.Executives of Absolute Haitian Corp., Yizumi-HPM and CH-America, which sells Chen Hsong presses, said they have injection molding machines in stock at their U.S. facilities. Because those presses were in the United States before the tariff, they are available at the regular price, the officials said.CH-America President Ken Heyse said the Torrington, Conn., company bought a large number of machines in anticipation of the tariffs. He said there will be a transition period."It's not like everybody is going to wake up Monday morning to higher prices," Heyse said.Looking at plastics equipment, the China tariffs cover more than injection molding machines. Chinese-made extruders, blow molding machines and thermoformers are on the list, as well as machine beds, platens and some other parts and hydraulic assemblies.Also on the list: molds for injection and compression molding.Injection molding machinery officials contacted for this story said customers have only recently started to ask about impacts of the tariffs. But the tariffs — which cover a broad range of industrial goods, not just plastics machinery — probably haven't sunk in yet with many processors, they said."I would say the last two to three weeks, the majority of our customers have at least mentioned it as we're quoting new machine sales opportunities," Beary said.Stocking upFacing potential tariffs, Beary said that Yizumi-HPM, based in Iberia, Ohio, began talking in February and March with Chinese parent Guangdong Yizumi Precision Machinery Co. Ltd. to increase the injection press build schedule for 2018."We don't anticipate having to raise our prices," Beary said. "We were fortunate enough to plan with our parent company earlier this year, so we have quite a few machines that are in our inventory here, stateside. Going forward, we are still working with Yizumi to develop an appropriate strategy. We want to do what we can do to minimize any negative impact for our customers."Yizumi also has a factory in India, giving it some flexibility to move production for presses bound for the United States, depending on how long the tariffs last.Glenn Frohring, president of Absolute Haitian, said customer phone calls began to pick up in late June, as the July 6 tariff date loomed. The company based in Worcester, Mass., sells injection molding presses made in China by Haitian Plastics Machinery Ltd., one of the world's largest plastics machinery manufacturers."Basically, there's a cost, and the cost is going up. Our strategy is to work together with Haitian and our customers to limit the tariff exposure to them," Frohring said. "Let's work with this together so it's not just one party absorbing the tariff."Absolute Haitian tries to keep its U.S. machinery levels high and worked to bring presses over before the tariff kicked in, he said. The company is selling machines out of that stock.Frohring, like Beary, is concerned about the impact of a trade battle on the broader economy, especially automotive.Officials of Absolute Haitian will travel to China later this month to discuss the tariff issue. Haitian has manufacturing operations in China, Brazil, Germany, Vietnam and India, so company leaders could consider building presses for the U.S. market in locations outside of China, he said.Absolute Haitian officials announced at NPE2018 the company is building a 116,000-square-foot facility in South Carolina to house stock machines, parts, sales, service and training.Tim Erdmann, principal of Plante Moran's manufacturing consulting group, said his firm is not yet fielding many calls from plastics processors asking about the China tariffs."I've gotten much more reaction on the steel and aluminum tariffs," which began June 1, he said. "Folks are actually starting to see the impact that the steel and aluminum tariffs have created."Erdmann thinks the China tariffs are still too new for processors to digest. The tariffs on Chinese goods, like the levies on steel and aluminum from several countries, are part of the Trump administration's negotiating tactics, he said."They are shots across the bow. How many of these will remain in force, and how long?" Erdmann said.Short or long term?Frohring, of Absolute Haitian, said if the trade war is short, it could mitigate the need to charge more."I don't think we're going to raise prices, because if the tariff goes away, the price stays the same. And it's just working together to manage the tariffs," he said.Heyse said that the uncertainty over the duration of the China tariffs makes it hard to plan for the future. Hong Kong-based Chen Hsong formally kicked off its effort to sell in the United States and Canada, through CH-America, at NPE2018. Now the tariffs come just as the business is starting. The firm does have some machines in inventory, he said."We don't know how long it's going to last. We don't know how much of the tariff to pass through to our customers, so we are really trying to take a step-by-step approach to this," Heyse said. "We are looking at raising prices, hopefully temporarily."CH-America gave customers and sales representatives advance notice about the pending tariffs. "We gave [customers] a fixed date of a week past the tariffs to purchase the machines at the existing prices, and after that prices are going to be increased."Tariffs on equipment from China will hit the broader plastics machinery sector, as most primary equipment manufacturers have become highly international, securing components overseas for U.S. press assembly operations, and even exporting completed machines.Austria-based Engel Holding GmbH builds its general purpose injection press, Wintec, in Changzou, China, and this year started selling them in the United States."We'll continue to proceed forward with Wintec," said Mark Sankovitch, president of Engel Machinery Inc., the company's U.S. operation in York, Pa.Sankovitch said Engel could shift some Wintec production to another country. The e-win electric Wintec press is not made in China now, he said.As a global player, Engel is trying to be proactive and inform customers about the situation, Sankovitch said. But he said all major machinery companies face challenges, especially for machinery ordered months ago, and under construction, which now fall under the tariff."You may be so far along in the schedule of that process that there's no turning back, in the sense that I can go and maybe have this manufactured someplace else. It doesn't work that way. So now you're stuck," he said.In a case like that, the machinery supplier and customer have to strike a compromise, since neither side can absorb the full 25 percent increase, he said.Meanwhile, Engel announced at NPE2018 that it will resume U.S. assembly of large-tonnage injection presses in York this year.Sankovitch said the company is dealing with Trump's executive order for China tariffs on a day-to-day basis. "As quickly as it comes, it can go away. So it's the stroke of a pen by Mr. Trump," he said.Milacron Holdings Corp. is based in Ohio but has far-flung manufacturing operations around the world. Showing how global manufacturing and supply chain issues make the tariff issue more complicated, in May, Milacron CEO Tom Goeke filed comments about the tariff with the office of the U.S government, saying the company favored tariffs on finished Chinese plastics machinery that it competes against, but arguing that tariffs should not be enacted on Chinese-made components that Milacron uses.Contacted for this story, Milacron Chief Financial Officer Bruce Chalmers said the publicly traded company would not comment until after it releases second-quarter financial results on July 26.Many customers are asking about tariffs, said Peter Gardner, vice president of sales and general manager of Daiichi Jitsugyo America, the U.S. distributor of Niigata injection presses from Japan and molding machines from South Korean builder LS Mtron Ltd. Country-of-origin issues can be confusing, since some Japanese and European machines are made in China today, he said.Gardner said he will take advantage of the low duty of Japanese-made machines, 3.3 percent, and the zero duty on Korean-made presses."While some will say it will put Chinese-made machinery at a disadvantage, others may say it will simply level the playing field," Gardner said.Manufacturing is being hit with a dizzying array of tariffs and growing trade wars, with the China tariff battle, the tariffs on steel and aluminum and potential auto tariffs, plus renegotiation of the North American Free Trade Agreement.The wide range of opinions about the tariffs on molds from China illustrates how, when it comes to protectionism, every company has its own angle of self-interest."My processor clients of course are very concerned, because several of them have tools in China already," consultant Laurie Harbour said. "Mold bases and all are included [in the tariff]. So they are absolutely going to get impacted by it."Harbour said smaller U.S. mold makers are happy about the tariff move. But larger ones, with operations or partnerships in China, will get hit."This 25 percent tariff could theoretically eliminate the cost advantage of going to China," she said.And Canada, already a formidable competitor to U.S. mold makers, could be a wild card, if China exports tools to Canada to get around the tariffs. Harbour thinks customs officials will require more paperwork certifying the country of origin, significantly adding transactional costs.

Aeyoung Park 2018-07-12

Market for AM in automotive production to reach US$5.3 billion in 2023

Market for AM in automotive production to reach US$5.3 billion in 2023According to a new report by industry analyst firm SmarTech Publishing, the overall market for additive manufacturing (AM) in automotive is expected to reach US$5.3 billion in revenues in 2023 and then grow to an impressive US $12.4 billion by 2028.The report pointed out that by 2028, the adoption of AM by the automotive segment for production purposes is going to mark an inflection point for the industry. While the market remains focused on prototyping and tooling, parts production will become the primary revenue opportunity by the end of the forecast period, surpassing prototyping, tooling, hardware and materials. Parts production including metal and polymer parts, as well as both parts produced internally by automotive OEM’s and in outsourcing, isexpected to be the primary revenue opportunity driving the entire segment, totaling nearly US$4.3 billion by the end of 2028.On the one hand, major new hardware from leading vendor is now focusing on automotive part production: multi-jet fusion (HP), digital light synthesis (Carbon) as well as metal binder jetting projects from Desktop Metal, GE, HP and Stratasys.On the other hand, major automotive OEMs have formed partnership with AM hardware OEM focusing on part production given the value they see from integrating additive manufacturing into their processes.Automotive industry stakeholders worldwide are racing toward full industrialization and integration of the AM process within their end-to-end production workflow, beginning with software and materials, passing through the actual AM hardware, and ending with services and a growing number of possible applications.Source: CPRJ International

Aeyoung Park 2018-07-09

Germany to launch recycling law for packaging in 2019

Businesses selling to consumers in the German market can face a fine of up to 50,000 euros ($58,290) and a prohibition in sales if they fail to comply with the country’s updated packaging laws.The act, which was approved in May 2017, will come into force at the beginning of 2019. It aims to improve the existing law on packaging by focusing on recycling and prevention of packaging waste.As part of the act, recycling targets for the different packaging materials will be increased, reaching 63 percent for plastic by 2022, from the current 36 percent. A 90 percent recycling target has been set for metal, glass, and paper and board by 2022. The act will also encourage reusable packaging, with the target of 70 percent reusable beverage packaging.Furthermore, the act will offer incentives for packaging producers to incorporate recyclability considerations into packaging design.Additionally, all businesses will have to register with the central packaging registry at www.verpackungsregister.com to maintain market access.According to consultants Lorax Compliance, companies that produce volumes of packaging higher than 80,000 kilograms of glass, 50,000 kilograms of paper and cardboard and 30,000 kilograms of aluminium, plastic and compounds which are sold in Germany should submit a declaration of compliance (DOC). Failing to do so could incur a 50,000 euro fine.“Germany as a country has set itself some ambitious future recycling targets to meet, which will affect producers considerably going forward,” explained Michelle Carvell, chief operating officer for Lorax.The legislation applies to all manufacturers, importers, distributors and online retailers placing goods on the German market.All companies which sell goods in Germany must prepare to participate in a dual system to arrange for packaging recovery after use to continue trading in the country.

Aeyoung Park 2018-07-05

Processors and producers struggle with nylon 6/6 resin shortage

- Nylon 6/6 resin has become hard to get in markets around the world▲ Ascent Performance Materials McDivittTight supplies of adiponitrile (ADN) feedstock have caused supplies of nylon 6/6 resin to become tight as well, according to market sources contacted recently by Plastics News.Resin market tightness in turn has led to higher prices for nylon 6/6, with some market sources citing increases of more than 50 percent — and as much as 80 cents per pound — in the last 18 months. Additional price increases were announced for July 1.An executive with an Ohio-based injection molder summed up the nylon 6/6 situation."The market is tight all over and pricing is nuts," he said.Rick Tizzard, sourcing director at distribution firm M. Holland Co. in Northbrook, Ill., added that the nylon 6/6 market "is balanced on the edge of a knife right now.""Automotive companies will feel the [nylon 6/6] pinch the most, because there are so many applications there," he said, "but these materials are specified for those applications, and it takes time to get a replacement material specified."In some cases, Tizzard added, nylon 6/6 users are trying to use nylon 6 instead. "Even if 5-10 percent [of nylon 6/6 users] did that, it would alleviate some pressure," he said."At this time, we are able to secure enough supply to cover our normal customer demand," added Shawn Williams, plastics senior vice president with distributor Nexeo Solutions in The Woodlands, Texas. "But we foresee the market continuing to get tighter before it gets better."Distributors are even having difficulty sourcing wide-spec or reprocessed grades of nylon 6/6, according to Michael Bernich, producer sourcing vice president with distribution firm Jamplast Inc. in Ellisville, Mo. In some cases, Jamplast has offered customers biobased plastics as a replacement, he added.Executives at nylon 6/6 makers Ascend Performance Materials and DowDuPont Co. said their firms are doing what they can in a tight market.Phil McDivitt, CEO at Houston-based Ascend, said the tightness is being caused by several factors, including underlying growth in major end uses of nylon 6/6 such as automotive, industrial fiber and cable ties. Demand in these areas is growing more than 3 percent annually, with growth in a more specified product like airbags checking in at 6-8 percent.McDivitt added in an interview with Plastics News that for several years, financial results in the ADN market weren't at a sufficient level to support investment. "If you look at the [ADN] industry, there was a lack of adequate returns for an extended period of time," he said. "As a result, there was a delay in making investments."Several market sources also cited ADN production problems at the Butachemie joint venture between Invista and BASF SE in Ottmarsheim, Germany, as having an impact on the nylon 6/6 market. That site ranks as the world's largest ADN production unit.In late 2017 and early 2018, Ascend added 110 million pounds of ADN capacity at its plant in Decatur, Ala. The firm plans to add almost 90 million pounds by the end of the year and almost 400 million more pounds by 2022."With a large site and our operational knowledge, we can add capacity in a modular fashion," McDivitt said. "Our strategy continues to be to expand in Decatur."▲ DowDuPont MayoExpect tight conditions through 2019But even with these expansions, McDivitt expects the nylon 6/6 market to be tight through the end of 2019. He added that although the tightness has led to higher selling prices for nylon 6/6, materials that have been suggested as replacements still are more expensive."I think what this has shown us is that nylon 6/6 has been underpriced relative to its value," McDivitt said.DowDuPont's Richard Mayo agreed that the market for nylon 6/6 and its derivatives in fibers and engineering plastics is "globally tight.""We've seen strong demand for the last several years because nylon 6/6 is a great value proposition in engineering plastics," he said in an interview. "In automotive in particular, nylon 6/6 is used for lightweighting."But Mayo, who serves as global nylon and polyester business director for DowDuPont, which is based in Wilmington, Del., and Midland, Mich., added that investments in ADN and other upstream feedstocks "haven't followed the same growth.""At the aggregate level, there's more [ADN] demand than supply," he said. "In a way, [makers of 6/6] have been victims of our own success."Mayo added that ADN sites on the U.S. Gulf Coast were impacted by hurricanes last fall. Those outages "created a big hole that the industry has struggled to recover from, and that's been exacerbated by issues with some big assets in Europe."According to Mayo, ADN is the primary issue, but nylon 6/6 also has been challenged by problems with other feedstocks, such as adipic acid and HMD.He added that supply problems for ADN and nylon 6/6 could last "at least until the end of next year." DowDuPont, which isn't back-integrated into ADN, "continues to meet the demand of long-time customers," but also is receiving "lots of enquiries from people looking for product."Mayo added: "There's no need for long-term customers to look at alternate materials."'Shortage?' Or an 'unsupported' claim?The tight nylon 6/6 market also has led to a bit of a war of words between Ascend and distribution firm PolySource LLC of Independence, Mo.In May, PolySource applications development director Cliff Watkins, a 30-plus-year industry veteran, circulated a document titled "How to survive the structural [nylon] shortage." In the three-page document, Watkins details historic reasons for the shortage and recommends several possible replacement materials.He cited DuPont — now DowDuPont — exiting ADN production as a reason for current tightness of that material."Chemical plants only make money when they are run at full capacity, and without a strategic underpinning (like which came from DuPont), no one builds plants far ahead of forecasted need," Watkins wrote.He added that capacity additions announced by ADN makers "won't be sufficient to meet market demand until 2021 at the earliest." Potential nylon 6/6 replacements offered by Watkins and PolySource include nylon 6, aliphatic polyketone, PPA high-heat nylon and polybutylene terephthalate.Ascend responded to Watkins' document with a reply from senior business director Dharm Vahalia, which challenged and criticized several of Watkins' points. "While we recognize the concern surrounding nylon 6/6 supply, the hysteria exhibited in [the PolySource article] is unfounded," he wrote.The "full production" claim "is … refuted by the ability to increase capacity through debottlenecking, meaning that the process being debottlenecked was previously running below capacity," according to Vahalia, who has almost 20 years of industry experience.He added that the claim of ongoing ADN undersupply "is unsupported by third-party analysis and that it's "misleading" to suggest that other materials could easily replace nylon 6/6."Making claims against a competitive product without legitimate supporting data is an area where the industry needs to improve and be more transparent," Vahalia said.

Aeyoung Park 2018-07-05

China’s Machinery Production Market Set to Grow 7.9% in 2018

China’s Machinery Production Market Set to Grow 7.9% in 2018China's machinery production is growing at a slightly slower rate in 2018 than that it did in 2017, but the industry is exhibiting strong growth of 7.9%, according to IHS Markit. Meanwhile, the overall production of material handling equipment will grow by 12.6% in 2018.IHS Markit expects the machinery production in China will continue to rise at a compound annual growth rate (CAGR) of 7.6% from 2018 to 2022.Favorable national policiesIn 2018, the Chinese government issued a series of favorable policies to promote the development of its manufacturing industry -- for example, the country’s strategic “Made in China 2025” program, which encourages enterprises to use high-end machine tools.As of April 2018, China's Ministry of Industry and Information Technology (MIIT) had founded five national innovation centers for material manufacturing, to focus on batteries for electric vehicles, optoelectronic information technology, traditional and flexible display panels and robots.The ministry also cultivated about 60 manufacturing innovation centers, at the provincial level. At the same time, the government’s implementation of comprehensive tax cuts for productive enterprises also provided policy support for machinery manufacturers.China will continue its "The Belt and Road Initiative" policy, strengthening cooperation with the member countries in the initiative and others in Latin America. To a certain extent, this initiative expanded the market for machinery used in automobile manufacturing, construction, electronics, metallurgy and textiles, says IHS Markit.Continuous optimization of industrial environmentIn China, new industries are growing fast. In the first quarter of 2018, the added value investment of high-tech manufacturing (i.e., information technology, biological engineering and new materials) increased by 11.9%, while fixed asset investment grew 7.9%.As said, equipment manufacturing and consumer goods manufacturing grew faster than other categories. Industrial robots, new energy vehicles, integrated circuits and other new products are growing rapidly. Faster development of the downstream industry has led to demand growth in related machinery products.The emergence of artificial intelligence, big data and other Internet of Things (IoT) technologies is injecting new vitality into China's machinery market. Its leading machinery manufacturers introduced the IoT concept into machinery, actively transforming themselves from traditional machinery producers to manufacturing services companies.Machinery production forecastIn 2018 China's machinery production development will be buoyed by the country’s national policy guidance and support, a large influx of investment funds and the initial effect of industrial structure adjustment. However, other more unfavorable development factors for development in 2018 cannot be ignored, comments IHS Markit.With trade disputes, like the China-US friction in 2018, on the rise, there is still a lot of uncertainty in the international environment. Domestic infrastructure investment in China is affected by national policies and macro-control, which strengthens its supervision of Public-Private Partnership (PPP) projects this year, but might also negatively affect infrastructure investment growth, causing some pressure on China’s domestic economy.Still, China’s machinery production will grow steadily under this pressure in 2018. With the continuous optimization of its industrial environment in the next four to five years, China’s machinery production market will steadily rise, even as it transforms, IHS Markit concludes.Source: CPRJ Intl

Aeyoung Park 2018-06-29

Chinese plastics processing industry to stay on growth track

According to the latest data of National Bureau of Statistics of China, the number of plastics processing enterprises at designated sizesin China increased from 12,963 in 2011 to over 15,000 in 2017.Meanwhile, the production volume of plastic products in China totaled75.155 million tons in 2017, representing an increase of 3.4% whencompared to the previous year. With this trend, the Chinese plasticsprocessing industry is expected to grow further.Apart from the continuous increasing number of enterprises at designated size, from January to November in 2017, revenues of these enterprises at from main operations amounted to RMB 2123.673 billion, representing an increase of 7.33% when compared to the same period of the previous year.In addition, the earnings of enterprises at designated size in the period of January to Novemb-er of 2017 amounted to RMB 123.095 billion, up 5.15% year on year.Export on the growing trackOver the years, the policy of achieving a stable foreign trade of China has started to yield results. The export of plastic products from China has been growing stably.As one of the biggest export countries of plastic products, China exports a wide range of products to about 230 countries and regions, including the US, Japan, Vietnam, India, UK, Australia, Germany, Korea, and Canada.In accordance with the statistics of the General Administration of Customs of PRC, the export of plastic products from China in 2017 was 11.68 million tons, up 12.2% year on year. The export value amounted to RMB 262.79 billion, representing an increase of 11.6% year on year. One of the key drivers of the export growth in the industry is the favorable policy environment.Analyzing the historical statistics, the unit price of Chinese plastic products for export was the highest from March to May and November to January of the next year. On the other hand, the unit price fell in February and from June to August.The outlook of provinces and citiesThe plastics processing industry of China are characterized by highly concentration in eastern, southern and central regions, while other regions are in rapid development. In 2017, the top 8 provinces (Zhejiang, Guangdong, Henan, Jiangsu, Sichuan, Shandong, Fujian, and Hubei) accounted for 2/3 of the domestic market share by volume while other 15 provinces were on the growth.In 2017, the production volume of plastic in Zhejiang province was 10.3552 million tons, down 3.49% from previous year. However, it still ranked at the top in the production of plastic products by volume.Zhejiang was followed by Guangdong which produced 10.1532 million tons of plastics product in 2017, up 0.98% from the previous year. In Henan, the production volume was 721.03 million tons, representing an increase of 19.87% year on year.The top two provinces in the production of plastic products were Zhejiang and Guangdong, both of their production volumes were over 10 million tons. In the future, with the rapid growth of demand for plastics in the automotive, consumer electronics, and medical sectors, the geographic concentration of the Chinese markets is expected to be more reasonable.In conclusion, the Chinese plastics processing industry was on stable growth with acceleration in industrial upgrading in 2017. Despite high pressure in costing, export trade continued to improve. The differentiation between enterprises was more obvious and cross-industry integration emerged as a trend.The trends of developmentCurrently, functional performance, lightweighting, sustainability and microform are the major trends in the Chinese plastic processing industry.Functional performance is the distinctive feature and competitive advantage of plastics products. Further enhancement in function performance is the direction for development of plastics products. It is also the key for the Chinese plastics processing industry to stay as a pillar of the national economy.Lightweighting is accompanied with the low carbon economy. Lightweight materials for aircrafts, vehicles, and railway transportation have attracted attention. Conventional materials and workmanship can no longer satisfy the needs of consumers. Brand new technologies for the processing of eco-friendly, lightweight, and highly stiff materials will be the effective ways for the realization of lightweight product featuring energy efficiency and reduction of carbon emission.Sustainability refers to the use of biological resources in the development and production of biodegradable plastics and bioplastics that facilitate the Chinese plastics processing industry to contribute to environmental protection and sustainable growth of the country and the world.Microform is a frontier technology in the discipline of the micro/nano-scale fabrication science of polymer. It is extensively used in optoelectronic communication, image transmission, data storage, medical devices, high-end sophisticated structure components, etc. It is expected to gain wider applications in the tooling and advance injection molding technology.Innovations emphasized in the Chinese plastics processing industryBy the end of the “12th Five-Year Plan”, the Chinese plastics processing industry wasgranted over 66,000 patents on new inventions and new applications. In the sameperiod, 30 technology centers were accredited as national level technology centers,while 9 were cited as national technology innovation models. Besides, 2 centers wereacclaimed as national small and medium enterprise public service models.In China, there are 10 laboratories involving development of plastics processing arelisted as important laboratories in the light industry. In addition, there are 17 specialregions and industrial clusters which are focusing on plastics processing industry in the country.China has established more than 300 high education schools in the discipline of polymer material science and related engineering. In the meantime, there are over 28 workstations of academy fellows who are experts and professional in the plastic processing industry.Source: CPRJ International

Aeyoung Park 2018-06-05

PP prices continue 2018 rocket ride, with PET also up and PS down

North American prices for polypropylene resin continued their wandering ways in May, jumping 7 cents per pound after falling by that same amount in the previous two months combined.Regional prices for PET bottle resin also ticked up an average of 2 cents per pound in May, with solid PS prices declining an average of 4 cents, according to market sources contacted recently by Plastics News.The 7-cent upward shock for PP included 5 cents of matching price increases for polymer-grade propylene feedstock and 2 cents in profit margin improvement that was won by PP makers, according to Scott Newell, a market analyst with Resin Technology Inc. in Fort Worth, Texas.Regional PP prices had slid a penny per pound in April and 6 cents in March. The market had started the year with a 9-cent hike in January and a 6-cent dip in February, meaning total price volatility for PP in the first five months of 2018 has been a vertigo-inducing 29 cents.North American PP sales through April were up just over 2 percent vs. the same period in 2017, according to the American Chemistry Council. A domestic sales increase of 2.3 percent was dampened somewhat by a reduction of almost 6 percent for sales into the export market.PP posted positive domestic sales results for those four months in film — up almost 11 percent — and injection molded caps and closures, where sales grew more than 7 percent.North American PET bottle resin prices bumped up an average of 2 cents per pound in May after being flat in April. Prices for the material had declined by a penny in March after nine consecutive months of increases totaling 13 cents per pound.PET market analyst Mark Kallman of RTI said that the May increase was the result of shortened supplies from the paraxylene and purified terephthalic acid feedstock stream, as well as "seasonal PET demand in an overall tight market."Demand for PET is increasing as warmer weather drives demand for bottled water and carbonated soft drinks, two of the material's major end markets. Also in the current market, paraxylene supplies "are returning to more normal levels, and [monoethylene glycol] should start easing, so we could see some stability in the near term," Kallman added.Solid PS prices in the region fell an average of 4 cents per pound in May after being flat in April and rising 4 cents in March. Prices for benzene feedstock also were down in both April and May, but the May PS decline "reflects general loosening in the supply chain rather than anything such as a one-to-one movement with benzene," according to Phil Karig, managing director of the Mathelin Bay Associates consulting firm in St. Louis.North American PS sales slumped 5.5 percent in the first four months of 2018. A domestic sales loss of 6 percent was softened somewhat by an increase of more than 12 percent in export sales.One bright spot for regional PS sales in the first four months of the year came in sales to distributors and resellers, which grew more than 10 percent. That category accounted for more than 10 percent of domestic PS sales during that period.Plastics News this week also is showing historical corrections to reflect net price changes for expanded PS and amorphous and crystalline PET. EPS prices are being moved downward 3 cents per pound to show net price changes that have affected that material since early 2017.Prices for APET and CPET are being increased 2 cents per pound to show net price changes that have taken effect since early 2016.Source: Plastics News

Aeyoung Park 2018-06-04

Opportunities soar in North American plastics market

Opportunities soar in North American plastics marketThe US, Canada and Mexico are the most important plastics markets in the North American continent. The plastics industries in these three countries are expected to set high due to different reasons. Nevertheless, the NAFTA negotiation is critical in the development process of this regional market.Growth remains strong for the US plastics industryThe Plastics Industry Association (PLASTICS) released its 2017 Size & Impact Report recently and found a positive outlook for the U.S. plastics market. Overall industry growth is expected.For years the plastics industry has maintained its position as the third-largest manufacturing sector in the US, behind oil and gas extraction and automobiles, and this trend continued in 2016.The report notes that the U.S. plastics industry remains historically strong and well positioned for continued growth.The industry’s shipments were worth US$404.4 billion in 2016, down 3% from the previous year. Lower raw material costs and low oil and natural gas prices primarily drove the decrease in shipment value.Value went down is not a significant issue because volumes continued to grow, said PLASTICS President and CEO William R. Carteaux.“Things have been on the increase the last few years,” Carteaux said in a webinar releasing the report. “There are lots of reasons for optimism in manufacturing right now.”The association’s presentation also included an analysis from the American Chemistry Council tracking plastics processor investment, noting 560 investments in expansion or new construction, with the most coming in Ohio, Michigan, Indiana, Wisconsin and Texas.US plastics job numbers up“More people are working in the plastics industry and that’s a testament to plastics’ economic vitality and innovation,” said Carteaux.The U.S. plastics industry employed 965,000 workers in 2016, up 1% from the previous year.At the state level, California had the most plastics workers. California took over the top spot from Texas, leading the way with 77,000 plastics jobs. Meanwhile, California also hosted the largest number of plastics companies.Ohio took over the second on the list with 75,200 jobs, while Texas dropped to third with 74,800.PLASTICS notes that employment figures in U.S. plastics should continue to grow, but that the rate of growth will decline over the next few years. The reason for this decline is the skills gap and an ever-deepening shortage of qualified workers.Therefore, the association reminds that the US must do a better job of training workers to fill the jobs that are available today and will be available tomorrow.Positive forecasts reinforced by federal tax reformPerc Pineda, Ph.D., Chief Economist with PLASTICS, has developed a general outlook for the plastics industry, as well as numerical forecasts for employment and shipments. The following are some key points:The US domestic plastics market is expected to continue growing in step with an economy that is growing steadily.Headwinds will come from skilled labor shortages, a maturing motor vehicle replacement cycle and a housing construction cycle that is not too far from peak sustainable levels.Tailwinds will likely come from improvements in manufacturing trade, including new foreign-owned manufacturing plants in the US, and also from new plastic resin capacity being built in response to new hydrocarbon feedstock supplies in the US.Because of labor shortages, all manufacturing facilities, including those involved with plastics, are expected to increase their investments in labor-saving equipment and technology.Real plastics industry shipments (after correction for inflation) are expected to grow 2.0% in 2017, 2.2% in 2018 and 2.5% in 2019. The principal source of the acceleration is the construction of new resin plants in the US.Meanwhile, the recent US federal tax reform is generally regarded as favorable to the development of manufacturing industry in the country, including the plastics sector. Among the changes, the reduction of corporate tax rate would clearly be most beneficial, pushing enterprises’ earnings into the red and strengthening their commitment in the US. ExxonMobil, being one of these enterprises, is planning to invest over US$50 billion in the US over the next five years to increase production of profitable volumes and enhance its integrated portfolio, which is supported by the improved business climate created by tax reform.Canada focuses on niche productsCanada’s chemicals and plastics sector has been supported by secure access, low priced raw material and infrastructure.According to its latest report, IBISWorld anticipates that the plastic and resin manufacturing industry in Canada will continue to grow over the five years to 2022, albeit at a much slower pace compared with the previous five-year period. Slowed growth will be due, in part, to an appreciating Canadian dollar.Besides, industry performance is highly susceptible to economic conditions abroad, most notably in the US. Nevertheless, downstream demand will drive growth as per capita disposable income and consumer spending rises.IBISWorld estimates that the plastic and resin manufacturing industry in Canada exhibits a low level of market share concentration, with the top four players accounting for an estimated 29.2% of total industry revenue in 2017, a figure that has remained fairly stable over the five years to 2017.The rest of the industry is composed of small- to medium-sized manufacturers who have developed strategies of supplying niche products to compensate for their lack of economies of scale.The plastics industry in Canada is highly competitive when considering the fact that the bulk of demand for their products is from outside nations, such as the US.Canada’s chemical sector alone is forecast to increase by 27% by 2020, according to Canadian Trade Commissioner Service.Increasing demand for overseas suppliers in MexicoMexico’s economy grew 2.3% in 2016 and the plastics industry grew 5.7%, according to the Mexico’s Secretariat of Economy. By the end of 2016, the country’s imports of capital equipment used in the plastics industry amounted to US$2.7 billion.Mexico is the largest destination for plastics and rubber equipment, tools, dies and industrial molds exported from the US. Besides, Mexico was the second largest destination for the US exporters of plastic products in 2016, according to the Office of the United States Trade Representative.In its latest study, The International Trade Administration of The U.S. Department of Commerce reported that, although Mexico’s plastics industry’s growth is currently moderate compared to past decades, manufacturers see an opportunity to rebound to higher growth rates as Mexico continues to negotiate additional free trade agreements with key economies.The plastics industry in Mexico faces serious challenges to increase their profit margins. Therefore, Mexican industry players are desperately looking for increased productivity.Interestingly, the challenges faced by the Mexico’s plastics industry have become the golden opportunities for the US manufacturers. As Mexico’s plastics industry requires increased productivity, more high-tech machinery will be required.By the same token, new processes and materials developed in other countries will also be adopted by Mexico’s plastics industry as a way of maintaining their competitiveness in the market.Up and coming sub-sectorsIn the last few years, the plastics industry in Mexico has seen an increase in demand of high-tech packaging equipment for the food and beverage sector.A large portion of Mexico’s recycled polyestyrene terephtalate (PET) was sent to China where it is then transformed and sent back to Mexico as synthetic fibers, which indicates a strong need for recycling technologies that could provide Mexico its own capability to produce its those fibers.The Asociacion Nacional de la Industria del Plastico, A. C. (ANIPAC), Mexico’s plastics industry association, estimates Mexico’s recycling rate was 23.7% of total production in 2014, amounting to only 1.2 million tons of recycled generated scrap out of the 5.26 million generated in 2016.It was reported that an increasing number of foreign mold-making companies have established operations in Mexico to supply their Mexican customers. However, Mexico’s major weakness is its ability to supply high quality alloys of machine grade steel for tooling and molds.Mexico is the 5th largest automotive parts exporter in the world, with 41% of goods going to the US. The country’s competitive advantage is based on a network of suppliers that cluster around Mexico’s main manufacturing industries.The Mexican automotive industry is crushing its production and export records. The investments in recent years have carried the industry to peak capacity and there is no sign of slowdown.Kia has opened its sprawling facility near the northern industrial city of Monterrey. Audi has also opened its Q5 crossover factory in the central state of Puebla. BMW, Toyota and a Mercedes-Infiniti joint venture all have plants under construction in Central Mexico.In a speech at the opening of Plastimagen Mexico 2017, ANIPAC President Juan Antonio Hernandez Leon said: “We generate about 265,000 full-time jobs and 550,000 part-time jobs, which indicates just how prosperous an industry we are.”However, he also admitted that the plastics industry in North America is suffering a violent displacement. “This region is being convulsed by the renegotiation of the North American Free Trade Agreement (NAFTA),” he said.NAFTA the key to developments of the three countries The North American Free Trade Agreement (NAFTA) is a treaty between the US, Canada and Mexico. It came into effect in 1994.Under the NAFTA, the three signatories agreed to systematically remove most tariff and non-tariff barriers to free trade and investment between them.Each NAFTA country forgoes tariffs on imported goods “originating” in the other NAFTA countries. Rules of origin enable customs officials to decide which goods qualify for this preferential tariff treatment under the NAFTA.US president Donald Trump is a longtime critic of the NAFTA in terms of the fairness of the agreement and to protect US workers, and he signed an executive order calling for a review of the NAFTA in April 2017.In comments made at the White House with Justin Trudeau, Prime Minister of Canada, ahead of the start of fourth of seven planned rounds of negotiations for the NAFTA, Trump warned it was “possible” that the US would drop out of the 1994 deal.Recently, the fifth round of negotiations was concluded in Mexico City, but members remain far from a deal.Source: China Plastic & Rubber Journal

Aeyoung Park 2018-05-15