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Plastics machinery shipments up again in second quarter

North American shipments of plastics machinery were up nearly 6 percent in the second quarter of 2018 compared to the second quarter of 2017, according to figures released Sept. 20 by the Plastics Industry Association's Committee on Equipment Statistics.The data marks the fifth consecutive quarterly year-over-year increase.Companies reported shipments of injection molding machines and extrusion equipment totaling an estimated $335.2 million in the second quarter, an increase of 1.6 percent from the first quarter of 2018, according to the association. First quarter shipments in 2018 totaled $329.8 million. Shipments of blow molding machinery were not reported."Plastics machinery shipments seemed to have hit a speed bump in the second quarter, but there's no indication that shipments for the remainder of the year are trending down," Perc Pineda, chief economist for the association, said in a news release."U.S. economic fundamentals remain strong," he said. "As the economy fast approaches — if it hasn't already attained — full capacity, businesses will have to cope with tighter resources, particularly labor, and output resources will not be as robust as in previous periods."In the association's second quarter survey, 11.4 percent of respondents reported their customers were having difficulty obtaining financing for new equipment. This was a 7.4 percent increase from the first quarter, the association said, citing rising interest rates in the United States.Other second quarter highlights from the association's report include:• Injection molding machines sales were up 4.5 percent compared with the second quarter of 2017.• Single-screw extruders increased 23 percent.• Twin-screw extruders, including co-rotating and counter-rotating machines, increased 80 percent."We can expect to see continued uneven quarterly data moving forward, but by and large the outlook for plastics machinery remains positive," Pineda said.

Aeyoung Park 2018-10-04

TPE production moving from Asia to North America

▲ Bob Eller speaks at TPE Topcon.(Frank Esposito)The global thermoplastic elastomer market is "at a change point" in 2018, with the supply chain shifting from Asia and Europe to North America, according to industry consultant Robert Eller."We're seeing a reverse flow of globalization," Eller said Sept. 19 at TPE Topcon, an industry conference hosted by the Society of Plastics Engineers in Fairlawn. "Companies like Black & Decker are finding good TPE compounders in China and other parts of Asia, and then those compounders are setting up operations in North America."Eller, president of Robert Eller Associates LLC in Akron, Ohio, added that recent tariff disputes between the U.S. and China "will further encourage" Asian TPE compounders to start producing their materials in the U.S.He cited Chinese compounders Kingfa Science & Technology and Polymax Elastomer Technology Co. Ltd. as Asian firms that have added U.S. production in recent years. Kingfa now has operations in Canton Township, Mich., while Polymax has a production site in Waukegan, Ill.In spite of this move toward North America, Eller said that the Asia Pacific region still accounts for half of global TPE demand. The region continues to have a production cost advantage, Eller said, although recent overcapacity has led to lower prices and some commodity-like behavior.He added that although the global TPE market is maturing, there are still opportunities for advances in automotive and other key markets."A car is basically becoming a box of electronics with devices that connect with other cars," Eller said. "That's making opportunities for smart functions for TPEs."Autonomous vehicles are "creating a path for smart TPEs" to be used in signaling, lighting, sensing and on "smart surfaces," according to Eller. And although the TPE market often has used "dumb filler," the said there are now opportunities for TPE makers to tailor fillers at nano-scale.TPEs also are being used more in auto window encapsulations, where olefinic TPEs are competing with PVC and polyurethane. Another impressive recent development, according to Eller, was Kraton's use of its SEBS-type styrenic block copolymers in an injection molded soft skin for auto applications.Looking ahead, Eller said that he believes that inter-TPE competition will continue and that commoditizing will continue to drive prices down. TPE makers "have to figure out how to get out of the commodity track," he added.Specialty TPEs will continue to gain market share, especially in areas where there's synergy between TPEs and engineering thermoplastics, Eller said, adding that smart TPEs "will allow TPEs to enter a higher-margin space."

Aeyoung Park 2018-10-04

Over 56% of global TPE produced in Asia

In 2017, about 4.7 million tonnes of thermoplastic elastomers (TPEs) were used worldwide, according to a study by Ceresana.Production of TPE is dominated by manufacturers in Asia. More than 56% of global production takes place in this region. Second largest producer is North America, followed by Western Europe.Demand for TPE is strongly focused on the largest economic powers. Currently, processors in China, the USA, Japan, and Germany combined account for about two thirds of global demand.Given their versatility and easy processing, TPEs are predominantly used in the automotive industry. About 36% of all TPE products are used in the manufacturing of vehicles. The applications cover segments such as fabric coating, sealing components, and bumpers. Therefore, the development of the automotive and transport industries, as well as their suppliers are important indicators for forecasts of future TPE demand.TPE are also increasingly utilized in the construction and other industries, e.g. mechanical engineering, medical engineering, electric engineering, and electronic engineering. By now, TPE can be found in numerous everyday products such as cables, shoes, sports goods, toys, and household appliances.The by far most commonly used type of TPE on the global market is the group of styrene block copolymers (SBC). Their applications reach from admixtures in adhesives to asphalt modification in road construction.The second largest TPE market is comprised by thermoplastic polyolefins (TPO), which are mainly used in the automotive industry. Another important type of TPE is thermoplastic polyurethane (TPU) that can, for example, be used for dashboards and housing shells.Source: CPRJ International

Aeyoung Park 2018-10-04

PET bottle resin, nylon 6/6 prices on the rise

North American PET bottle resin prices jumped by an average of 2 cents per pound in August, getting back the 2-cent decline that the market had posted in July.Market watchers cited tight supplies of purified terephthalic acid (PTA) and other raw materials. Prior to the July drop, regional PET prices had increased a total of 5 cents in the May-June period.The potential restart of a PTA plant operated by Alpek SAB de CV in Altamira, Mexico, also could impact regional PET prices. The plant was damaged by a mid-July fire.Alpek officials said at the time that the plant would restart within four to eight weeks, but market sources said that it's not fully operational yet. The fire was at one of the site's two PTA units, which has annual production capacity of more than 1 billion pounds.In the engineering resins market, Plastics News this week is showing a 20-cent-per-pound increase in prices for nylon 6/6 resin. The change reflects increases over the past four months. Nylon 6/6 has been in short supply this year as a result of a lack of adiponitrile (ADN) feedstock.Some producers have added ADN capacity to meet nylon 6/6 demand, but some buyers of the resin expect the market to be tight through the end of 2019.

Aeyoung Park 2018-09-21

Report: Single-use plastic packaging must adapt to survive

Recycling and sustainability are here to stay, and the plastics industry must adapt in order to survive.That outlook is the main take away of “Rethinking single-use plastics,” a study just published by market researchers with major financial institution Citi. The researchers paint an extensive picture of the battle between plastics, paper, metal and glass in packaging, but an embargoed version of the study stops short of making firm recommendations to plastics packagers.The stakes are huge. Packaging accounts for about 45 percent of the $1 trillion global plastic market. Only 14 percent of plastic packaging is recycled, the report stated.Recycling and sustainability issues have been debated for years in North America and Europe but the drastic cutback of imported plastic scrap by China that began in 2017 has added extra urgency to the debate. China’s recycling industry accounted for about half the global recycling trade at its peak, and when the country began throttling back plastic scrap imports last year, prices for recycled plastics fell through the floor as mountains of scrap tried to find a home.China’s actions have accelerated bans and other restrictions for single-use plastics in countries around the world. These restrictions have cascaded into a series of responses. The American Chemistry Council’s Plastics division, for example, is urging all plastic packaging be reused, recycled or recovered by the year 2040. Europe is striving for all plastic packaging to be recyclable or reusable by 2030.Citi researchers point to a multi-pronged approach to meet recycling and sustainability concerns.Standardized pricing mechanisms could help plastic recycling and trading. Waste-to-fuel technologies could spur increased recycling rates by providing a ready and useful market for scrap plastic. Use of radio-frequency identification tags in plastic packaging could make sorting and recycling easier, the report noted. Large plastic and chemical companies have the ability to innovate and are introducing polymers that compete with conventional plastics and other materials.Biodegradable plastics have been around for about 20 years but the field is still in its infancy. In their favor is an ability shown those plastics can decompose in about a half year, similar to other compostables such as paper.Citi researchers cite a study indicating biodegradable polymers demand over the next five years will grow at 9 percent per year starting from the base point in 2017 of a global total of 335,000 tons. Acceptance of the polymers could be aided by their ability to reduce carbon footprints so that carbon credits could offset their higher cost. Consumer trends and legislation also could make biodegradables’ higher cost acceptable. Already, more than 1 million tons of biodegradable plastics production capacity is in place globally.Plant-based raw materials are noted in the report as another solution, and are especially pertinent to PET bottles. Such raw materials promote sustainability and fortify PET’s ability to compete against traditional materials on a performance basis. Coca-Cola Co.’s faith in this approach led it aim that all its bottles be made with plant-based content by 2020, up from 30 percent in 2015.Consolidation in the packaging sector could help plastics compete, researchers wrote. Larger companies are better able to research and develop new packaging and improve efficiencies in manufacturing and transportation. Mergers usually result in cost synergies, especially in resin procurement. Resin can account for 50 percent or more of the cost of plastic packaging.Consolidation is well underway in the packaging industry, the biggest recent move being Amcor Ltd.’s plan to acquire Bemis Co. Inc.For the time being, however, plastic packaging production now is extremely fragmented, according to the study. The top four firms in plastic packaging account for some 28 percent of the market whereas the top four in glass containers account for 95 percent of production and the top four in beverage cans hold 90 percent of their market.Plastics processing may be more difficult to consolidate than companies reliant on traditional materials. Plastic packaging encompasses a wide range of media, from film to pouches to bottles to trays, while glass and metal packaging have much narrower applications. Although innovation and scale will favor continued consolidation, the researchers predict there will always be smaller, niche players in plastics.Resin producers can play a key role in protecting plastics demand. Many have introduced polymers based on sustainable raw materials. New resins can offer more opportunities to reduce weight.Some resin companies, especially in Europe, have acquired recycling companies that might offset any erosion in virgin resin demand. LyondellBasell, for example, recently acquired a 50 percent interest in Quality Circular Polymers, a plastics recycler based in the Netherlands.Cost vs. PerformanceWith plastic packaging under fire on many fronts, traditional materials suppliers are eager to regain lost market share. In many applications it will be a fight between cost and performance with no obvious winner.Aluminum could regain market share in single-serve soft drinks and other beverages. One appeal of aluminum is its recycling record. An average aluminum can is comprised of 70 percent recycled content compared with about 3 percent for PET and 23 percent for glass.PET bottles greater than 24 ounces appear less threatened than smaller sizes. Europe is more reliant on PET bottles than the United States and could see more PET market share erosion.PET has essentially replaced glass in carbonated soft drink markets and now holds 50 percent of the U.S. market for the beverages.Plastics caps and closures are also susceptible to replacement by metal. About 73 percent of caps and closures are made of plastic, mainly polypropylene, for which there is a paucity of recycling capacity.Glass is a threat to plastic in high-end and niche applications like cosmetics where it can be perceived as denoting high quality. However, glass has its drawbacks. It breaks easily, is heavy and has low or negative value in recycling streams, the report noted.Single serve cups for hot and cold beverages are another battleground where sustainability and recyclability are not clear cut, according to the Citi study. Expanded polystyrene cup use has been declining 3 percent a year or more recently. Paper cups have the largest U.S. market share at 52 percent but some beverage suppliers are using paper with a polyethylene lining which frustrates recycling.Protective packaging is another area where plastics could lose ground. Only 15 percent of U.S. plastic film is recycled. Recycled paper packaging is being adopted to the detriment of plastic. Crushed kraft paper could replace some plastic bubblewrap, pillows and peanuts that are now dominant materials to fill voids in e-commerce packaging.Plastic stretch films, however, may face less substitution. The films are mainly used in manufacturing and distribution where they are not obvious to environmentally concerned consumers. The films have a cost advantage over metal strapping and new stretch hooding techniques promise less plastic use than conventional spiral wrapping. About 70 percent of stretch film usage goes to pallet wrap for storage and distribution.The “paper or plastic” dilemma for shopping bags will continue. Each material has advantages and disadvantages. In the United States some 30 billion plastic bags are used annually compared with about 10 billion paper bags.

Aeyoung Park 2018-09-21

Plastics industry seeks infrastructure dollars for recycling

Scott DeFife, vice president of government affairs for the Plastics Industry Association, addresses the crowd before the industry's annual lobbying day. (Plastics Industry Association)Plastics industry executives fanned out over Washington Sept. 12 for their annual lobbying day with a new message: a push for more federal government spending on recycling to try to address public concerns about plastics in the environment.The lobbying fly-in traditionally focuses on more pocketbook issues like trade policy, worker training and regulation, and those remained high on the agenda for the more than 100 executives who took part.But rising concerns over plastic waste and worries over bans or taxes on plastic packaging led to an expanded focus this year."Recycling infrastructure is really the new key point that we want to raise," said Scott DeFife, vice president of government affairs for the Washington-based Plastics Industry Association, the lead organizer among five trade associations at the event.For the industry groups, that means pushing for Congress and President Donald Trump's administration to change how Washington views federal infrastructure spending.Instead of being a vehicle mainly for building things like roads and airports, they want some federal infrastructure spending to be earmarked for city and state recycling operations such as materials recovery facilities and waste to energy plants."We're saying some infrastructure spending should be on recycling, waste to energy, whatever needs to be done to properly handle plastic waste," said Chairman Wylie Royce. "On top of that you're creating recycling jobs."DeFife said the effort is in its very early stages and the association is still putting together detailed legislative proposals.But including it as part of lobbying day is another sign of how waste issues are taking a higher profile for industry groups: the CEO of the American Chemistry Council, for example, in June said he was delaying his planned retirement specifically to work on plastics waste issues.DeFife said the federal government should see the global trade in recyclables as it sees world trade in wheat or other farm commodities."In D.C. they think of infrastructure as roads and bridges, and we're trying to get them to think of our material as an asset," DeFife said. "It should be invested in."Fred Daniell, president of Kureha America LLC, meets West Virginia Sen. Shelley Moore Capito during the plastics industry's Sept. 12 Washington lobbying fly-in.(Plastics Industry Association)Trade policyThe lobbying day officially had three priorities: trade, workforce and infrastructure.On trade policy the industry returned to a familiar theme, in general supporting free trade, but with a nuanced position that not all industry sectors see it the same way, particularly around China."As an association we want to promote free trade, we're basically free traders," said Royce, who is senior vice president of colorant supplier Royce Global in East Rutherford, N.J. "We don't see a whole lot of value to tariffs. Obviously, there are some unique situations that we can understand."DeFife said there's a "broad consensus" among the association companies in support of not putting new tariffs on trade with Canada and Mexico as part of any revamped North American Free Trade Agreement.While the Trump administration and Mexico have announced the outlines of a new trade agreement between the two countries, DeFife said the plastics industry wants Canada in any new version of NAFTA."The goal is we want to maintain positive trade relations and not create turmoil in the industry, in North America," DeFife said.But the Trump administration's tariffs on $50 billion in Chinese imports and plans for tariffs on another $200 billion that could be enacted this month, have divided the industry.The American Chemistry Council, which was part of the lobbying day, has argued strongly against tariffs on China, in part because it fears retaliation from Beijing will close off the Chinese market to U.S. resin exports.But others, particularly plastics processors like packaging company Pactiv LLC and some large vinyl flooring makers, testified at government hearings in favor of tariffs on Chinese imports.The industry is worried about tariff fights damaging the overall economy and undoing positive gains the industry has made, including positives from the federal tax cut, and would prefer a resolution and non-tariff ways of addressing concerns about China, DeFife said."Retaliatory tariffs escalating doesn't end well," he said. "Don't let it spin out of control, to the point that you damage the economy and damage the positive gains that the industries have."Some participants in the plastics industry's annual Washington lobbying day Sept. 12, on the steps in front of the Capitol building. (Plastics Industry Association)Plastic pipeAnother topic pushed by the executives was changes in federal laws to support more competition in government infrastructure for pipe.It's the second year that "open competition" in pipe has been on the industry's lobbying day agenda, and the group sees it leveling the playing field for plastic pipe in government purchasing, said Tony Radoszewski, president of the Irving, Texas-based Plastics Pipe Institute."A lot of the specifications are written around concrete and iron materials," he said.As well, the industry was using the event to tell lawmakers about the plastic pipe industry's increasing use of recycled content in storm water pipes, up to 40 percent in some cases, he said."We want to start broadcasting the fact that we believe up to 35 percent of curbside recycled bottles goes to corrugated [high density polyethylene] pipe," Radoszewski said.In a statement for the lobbying event, PPI said recycled content pipes perform as well as pipe made with virgin HDPE and can be a way for governments to reduce the environmental impact of large storm drainage projects."Our industry takes a product that has a 60-day shelf life and turns it into a product with a 100-year service life," he said.Building connectionsApart from talking specific points with legislators, executives also said they saw value in building longer term connections and supporting the overall industry.Norm Forest, the president of the Manufacturers Association for Plastics Processors, said the Indianapolis-based group is not a lobbying organization, so he said it was difficult for MAPP to speak on hot button issues like trade. It brought about a dozen members to the lobbying day."I'm here to participate in supporting the Plastics Industry Association and share with my Congress people," said Forest. Speaking for his company, he said supporting legislation on training and apprenticeships is a key issue.The event attracted about 130 participants, which DeFife said was a record. The date was moved this year to coincide with the plastics association's annual Washington board meeting, which could have boosted turnout.Royce also said the charged political atmosphere in the country may be increasing interest among executives, even with what is generally strong business conditions."The general industry mood and business mood is very, very positive, but what I'm also seeing is there's more political activism in the world than we've ever seen," Royce said. "I think people are starting to realize that we need to talk to our representatives and we need to deal with them and they have to understand our position. It's the old adage 'If you're not at the table, you're on the menu.'"

Aeyoung Park 2018-09-21

European soft drink industry pledges package recyclability

Unesda Soft Drinks Europe has joined the ranks of other European associations to announce a set of voluntary measures to meet European circular economy ambitions. As part of the measures, the association announced Sept. 13 that 100 percent of soft drink primary plastic packaging will be recyclable by 2025. Unesda, which represents a range of soft beverage manufacturers, including still drinks, cordials, dilutables and energy drinks, also said that by 2025 soft drink PET bottles will contain a minimum 25 percent recycled material on average. The European body has also committed to work towards increasing and optimizing collection rates of soft drink primary plastic packaging for recycling. Unesda did not elaborate on how it will achieve the target. “Achieving circularity through optimal collection, recycling and use of recycled PET is a top priority for our industry,” Unesda Director General Sigrid Ligné said. Unesda members, he went on to say, “want all their packaging, including plastics, to be collected and recycled and not discarded on our streets, oceans and waterways.” To achieve higher recyclability, Unesda members will also work on their design, an effort to be set up and managed by the industry. The announcement was in response to the EU strategy for plastics in circular economy, which calls on industry associations “to come forward with voluntary pledges to boost the uptake of recycled plastics.”“The soft drinks sector supports growth of a secondary raw material market that makes food grade quality recycled PET sufficiently available, accessible and affordable. With these conditions met it is ready to go way beyond its current target of a minimum 25 percent recycled material on average,” the association stated.

Aeyoung Park 2018-09-21

Pactiv pushes for tariffs on range of Chinese packaging

Pactiv pushes for tariffs on range of Chinese packaging ⓒPactivPactiv LLC, one of the largest U.S. plastics companies, is pushing for tariffs on a range of Chinese injection molded and thermoformed packaging, including cutlery and tableware.Pactiv CEO John McGrath says an influx of imports from China has forced his company to close factories and spend millions of dollars defending itself against Chinese imports that violate Pactiv intellectual property."In the last seven years, we have closed 10 manufacturing plants around the U.S. due to the influx of Chinese imports," McGrath said at an Aug. 20 tariff hearing in Washington. "These items are brought in by China in huge quantities at below market prices. And [they] threaten to steal our market share in the industry and hurt our bottom line."McGrath was part of a parade of more than 350 witnesses who testified over six days of hearings. He was one of the most prominent plastics executives arguing for tariffs.He urged the U.S. government to take a tough line and put tariffs of at least 25 percent on the products, rather than the 10 percent rate Washington had initially proposed. The import duties Pactiv wants are a very small part of the huge $200 billion package of tariffs proposed by President Donald Trump."The unfairly cheap prices of Chinese imports will only be offset with a tariff of 25 percent or higher," McGrath said. "In order to achieve results from the [U.S. government] investigation, the administration needs to take a firm stance against China and these manufacturers."Specifically, Pactiv is pushing for tariffs on seven product categories — four that are in the current U.S. plan plus three additional subheadings covering tableware, including cutlery and cups.Overall, the Trump administration wants to put tariffs on more than 6,000 categories of imports in this $200 billion round. The tariffs could start in late September or early October and would be in addition to tariffs already in place against Chinese resins, machinery and molds.Executives with ties to China's plastic packaging industry told Plastics News the tariffs would raise costs for U.S. consumers.Gilbert Lee, chief financial officer for Fuling Global Inc., a Wenling, China-based maker of plastic disposables that supplies Wendy's, Burger King, Subway and other chains, said it's a low-margin industry, from which U.S. companies have backed away."Making plastic cutlery is a low-tech, high-labor type of manufacturing," Lee said in an email. "That's the main reason U.S. companies shifted it offshore, along with many similar types of manufacturing, in the first place. Profit margin is slim, volume is high.""No one really wants to do it here," said Lee, who is based in Fuling's Allentown, Pa., factory. The company, which is traded on the Nasdaq stock exchange, has four factories in China and said it gets 90 percent of its sales from U.S. customers.Tariffs would strain the supply chain, he argued."I don't believe the U.S. has sufficient capacity, at least in the near future, for producing domestically, let alone the higher cost of manufacturing," Lee said. "It will be a complete change of model."Generally, tariff opponents argue the cumulative impact of higher prices across the economy will eliminate more jobs than they create.Both Lee and Ben Ho, president of the China Thermoforming Association, said the tariffs would directly impact U.S. consumers.Ho said most Chinese thermoformers supply its domestic market, so tariffs would likely have a bigger impact on U.S. customers, by raising prices, than on China."The higher tariffs will increase the cost of food in chain stores," Ho said. "It would actually harm the common interests of Americans."Pactiv argues it's protecting jobs in the United States.The company employs more than 8,500 in 40 U.S. factories across all its packaging businesses, which include paper and plastic. According to Plastics News data, Pactiv is North America's largest thermoforming company, with 22 factories generating an estimated $2.85 billion in sales.McGrath argued that imports have hurt the U.S. disposable packaging sector, and he told the hearing that China is the source of 55-85 percent of the imports in the categories where Pactiv is seeking tariffs.He told the interagency panel, led by the office of the U.S. Trade Representative, that Pactiv has had to fight to safeguard intellectual property from Chinese competitors."As a company, we have had firsthand experience of having our intellectual property stolen by Chinese manufacturers, so we are particularly pleased to see that these efforts are being taken by the administration," McGrath said. "On one product alone, we have defended our intellectual property nine times in the last 10 years, at a cost of several million dollars."In an email, McGrath said Pactiv has had to repeatedly defend its Newspring line of injection molded containers "against knockoffs entering the U.S. from Chinese suppliers over the past decade.""Pactiv was successful, but the process was protracted and expensive and, for every case Pactiv stopped from entering the U.S., many more slipped through undetected," he said. "This type and other types of unfair competition from Chinese suppliers have cost Pactiv business and many of its U.S. employees their jobs."The company did not respond to an email seeking more details on those IP cases, but the Newspring business has been active in trade cases for years. For example, it filed a complaint with the U.S. International Trade Commission in 2004, alleging that two Chinese firms were infringing patents on its containers.Newspring filed that case before Pactiv purchased the business in 2005. The ITC ruled in favor of Newspring on most of those complaints and prohibited importation of infringing containers.McGrath said the terms of trade with China have not worked for companies like Pactiv."Chinese companies, with strategic support from the Chinese government, have reaped the benefit of free trade with the U.S. to the disadvantage of U.S. companies and workers," McGrath said. "When the U.S. and China reach agreement on a trade deal which ensures free and fair competition between U.S. and Chinese companies, Pactiv will support eliminating the increased tariffs on Chinese imports."

Aeyoung Park 2018-09-03