HANDLER

Market trends

news Market trends

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

Resin distributors see success amid challenges of 2018

Resin distributors see success amid challenges of 2018North American resin distributors are seeing some good things so far in 2018, even if the market is facing some challenges.Most distribution executives contacted for this story said that their firms' results were up — in dollars or volume in pounds or both — in the first half of the year.John Jorgensen III has seen all sides of the distribution market this year at Conventus Polymers LLC, the Parsippany, N.J.-based firm where he's co-owner.2018 "has been a great year for us," he said. "We've seen high double-digit growth, and most of our end markets are up.""But it's been a crazy year in terms of supply," Jorgensen added. "Polycarbonate has been tight, and nylon 6/6 is crazy right now. We've never had a case where we couldn't supply a customer, but we do a lot of application development, and in some cases we've had to give a secondary [material] option."Results are what matterMarket challenges haven't prevented most distribution executives interviewed for this story from reporting solid growth."Our business is up, and we have an aggressive growth plan," said Ed Holland, president and CEO of M. Holland Co. in Northbrook, Ill. "We're up double digits in pounds. One of the reasons we're doing well is because we've invested in people, technology, new products and acquisitions. Our new business development group is starting to produce."Bamberger Polymers of Jericho, N.Y., has seen 12 percent volume growth in pounds, according to Mike Pignataro, North American sales vice president for the company."We're seeing slow and steady growth in the U.S. and Canada," he said. "There are a lot of good distributors out there, each with their own niche. We're all focused on what we do best and maintaining that business."Sales volume is up around 6 percent at Osterman & Co. in Cheshire, Conn., according to Dave Dever, distribution sales vice president. The firm's major focus has been on prime grades of branded resins.Chase Plastics Services Inc. President Kevin Chase said his Clarkston, Mich.-based firm has seen volume up substantially at rates he described as "high single-digit" and three times that of U.S. GDP growth."We're having a really good year," said John Moisson, president of Jamplast Inc. in Ellisville, Mo. "Pricing has been relatively stable, volume is good, and our customers have been doing well."Earnings resultsAmong publicly held firms, the distribution unit of Avon Lake, Ohio-based PolyOne Corp. saw first-half sales growth of 11 percent, but it saw operating profit for the quarter decline by 5 percent."We had a strong first-half revenue gain due to growth in several key markets," PolyOne Distribution President Scott Horn said in an email. "However, our bottom-line results were impacted by continued investment in commercial resources, higher transportation costs and material price increases."Raw material increases are driven by cyclical market dynamics, but we expect higher transportation costs to continue for the foreseeable future," he added.At Nexeo Solutions of The Woodlands, Texas, plastic distribution sales were up 8 percent for the quarter ended March 31, while gross profit increased 3 percent. Officials credited higher selling prices for the sales boost, as the firm's plastics sales volume in pounds was down 4 percent for the quarter."Our general theme is that we're seeing growth in line with GDP as we focus on investments and speed and customer intimacy," said Shawn Williams, senior plastics vice president..Err ... supply?▲ Kevin ChaseUncertain supplies of resins have led to some anxious moments for distributors in the first half."A lot of materials are tight," Kevin Chase said. "We're seeing it in nylon 6/6 and polycarbonate and acetal. We're not seeing allocations, but tightness."Demand is up, but no [resin maker] has added capacity since before the recession," he added. "Their [return on investment] is just starting to get there."When material supplies get tight, Chase said his firm "tries to work in the framework of our existing suppliers, but in some cases we have to satisfy customers and look to other options."On the commodity side, the polypropylene market also has been tight."We can sell a lot more of it if we could get it," Ed Holland said. "It's still a challenge. We don't see any relief in polypropylene until 2020 or 2021.""Customers look to us to solve their problems, but there have been times this year when it's been tough to be a distributor," added Grant John, president and CEO of PolySource LLC in Independence, Mo. "The situation in nylon 6/6 has been challenging. Not all applications can go to other materials."Moisson at Jamplast agreed that availability of nylon 6/6 has been limited, and that although ABS has been available, "there's not tons of it floating around." Even some supplies of material imported from Asia have been snug, he added.Marking the marketsAmong end markets and resin categories, Moisson said that Jamplast's sales of bio-based products are 20 percent ahead of last year's pace and that it's also seen growth in 3D printing and blends and alloys. On the bioplastics side, Jamplast has worked with bioresin maker NatureWorks for more than 15 years.At Bamberger, Pignataro cited industrial blow molding as "a big area for us" and added that PE stretch film is also doing well. Many of Bamberger's customers have new capacity "up and running with more to come" in 2018.Ed Holland said no single market has stood out for his firm this year but that it's seen growth in several of its main end markets, including flexible packaging, rotational molding and automotive.Kevin Chase added that all areas have been strong for his firm, including automotive lightweighting. "Car builds are down, but companies are doing a better job of metal-to-plastic conversion," he said.At Conventus, Jorgensen said that his firm's sales were up in oil and gas, building and construction, health care and electrical. He added that Conventus was doing more work with engineering resins and high-performance materials such as polysulfone, polyphenylsulfone and polyetheretherketone in areas of metal replacement.High density polyethylene has provided growth at Osterman, according to Dever, with higher sales in caps and closures, consumer products and food packaging.General Polymers Thermoplastic Materials LLC of Clarkston, Mich., has been strong in automotive, industrial and appliance so far in 2018, CEO Greg Boston said.Health care, transportation and outdoor high-performance markets have led the way for PolyOne because of investments the firm has made in those areas, Horn said. In terms of materials, PolyOne is seeing good growth across both engineering and commodity portfolios with slightly stronger demand for olefinics, he added.Williams at Nexeo cited health care, general industrial, sports and leisure, building and construction and electronics as areas of strength in the first half. Potential new products for his firm include compounds and materials for wire and cable.Impact of taxes, tariffs▲ Ed HollandAlthough many distribution execs said it was too soon to measure the full impact of changes in U.S. tax policy and of potential tariffs on imported goods, they already were seeing effects in some areas."The tax change should be generally positive for most manufacturers," said John at PolySource. "Tariffs had been more manageable and more expected, but now we might see some surprises that lead us to change our strategy."At General Polymers, Boston said that the tax changes should impact distribution in a positive way because of "overall support for business from the government."Mike Kirtley, president and chief operating officer for General Polymers, said tariffs could impact companies on the steel side, possibly leading them to look at existing buildings rather than build new ones.The tax situation is helping Osterman's customers buy new equipment, according to Dever, but he said the new tariffs might lead the firm to do more volume in Central and South America instead of Asia.Kevin Chase was bullish on the tax cuts, saying they've allowed his firm to double its 401k match to employees and to give raises and bonuses as well."Any time you can take money out of the hands of the government and put it into the hands of free enterprise, that's a good thing," Chase said. "We're seeing a Trump bump out there."M. Holland's customers are also buying new equipment, Ed Holland said, but he added that the tariffs "have multiple issues and none of them are good.""They've created uncertainty about investing in business," Ed Holland said. "Steel affects auto and supply chains — 20 percent of the cost of a new plant is steel. And our company and many others have worked to set up business with Canada and Mexico."Changes on the tax side are also helping Jamplast's customers."After going through the recession and then being so cautious and conservative, we're finally seeing good optimism and expansion with people buying new machines," Moisson said.Tariffs might challenge traditional areas but could help Jamplast's sales on the bioplastics side, he added. Moisson said that point was driven home recently when he and his wife were offered paper straws instead of plastic ones at a local restaurant.Look to the horizonMost distribution execs expect to see solid results for the rest of 2018. Many firms are addressing the future of the industry, even if they're doing so in different ways."I think one of the long-term trends we'll see is big petrochemical firms aligning with big distributors," said Moisson at Jamplast. "Then there will be a second tier [of distributors] aligned with smaller niche-type materials like bio-based resins or elastomers or acrylics to help rep smaller [material] suppliers that don't get attention from larger distributors."At Bamberger, Pignataro said his firm won't be affected by being recently acquired by Plastiche SA, a Luxembourg firm controlled by the same family that controls materials giant Ravago Group. Ravago's businesses include resin distribution."We're still a separate entity with our own sales and management and financing," he said. "There's no intention to change what's worked. We're all excited about the future of industry with the addition of branded distribution partners."M. Holland might look to add more compounders to its line card, Ed Holland said, and to find ways to benefit from exclusive distribution deals, such as the one it has in the United States for nylon-based materials made by Teknor Apex Co. of Pawtucket, R.I.He added that consolidation among the customer base has also been a challenge, with several customers now buying directly from resin makers. At the same time, Ed Holland said, M. Holland "always is looking" look to add to its line card through acquisitions or new suppliers.Conventus plans to "aggressively expand our product line for specialty products with our good value proposition," Jorgensen said. The firm has also added two sales reps in the last year and intends to add one or two more by the end of 2018.Relationships are also a driver at Osterman."This is a relationship business," Dever said. "When my career is over, I want to look back and be proud that we've provided service while being competitive."He added that Osterman is now working with its seventh sales training class. The firm has hired more than 30 sales reps from its first six classes.General Polymers recently moved into a new, larger office space and plans to add four or five new sales reps this year, according to Kirtley. The firm has also had its materials approved by several new customers.PolySource plans to hire two or three more sales reps this year and is looking for new materials to grow its geographic reach."We continue to talk to new suppliers to find more materials that fit into our mission," John said.Nexeo is facing inflationary costs on lumber, pallets, cardboard, steel drums and pails, but it still expects "steady growth" for the rest of the year, according to Williams. The firm plans to build "a more robust online presence" and is providing more access to shipping data and real-time inventory information to its sellers.The image of plastics remains important to PolyOne, especially in light of recent challenges to single-use plastics and concerns over ocean plastic waste."Plastics are extremely valuable materials making important contributions in every industry," PolyOne's Horn said in an email. "Further unlocking that value with more effective, universal recycling and awareness programs will entail collaboration among industry, consumers and infrastructure globally."Customer relations also remain a big area of focus for Chase and other distributors."You have to constantly drive value," Kevin Chase said. "I don't care if you're selling to your sister-in-law. Great companies are good at delivering value services."Resin distributors see tightness in some materials, but report steady growth.

Aeyoung Park 2018-09-03

Who are the top manufacturers in the Chines plastics machinery industry in 2018?

Who are the top manufacturers in the Chines plastics machinery industry in 2018?China Plastics Machinery Industry Association (CPMIA) has announced the results of “China's most competitive plastic machinery enterprises 2018”. The rankings were based on the financial reports of 2017 submitted by the enterprises, which were audited by different related departments of the Association.For the “Top 30 Comprehensive Strength Enterprises of China Plastics Machinery Manufacturing Industry in 2018” lists by main business income and net profit, HAITIAN (海天) was ranked No.1, followed by YIZUMI (伊之密) and JWELL (金纬).Meanwhile, HAITIAN was also ranked No.1 on the list “Top 15 Enterprises of China Plastics Injection Molding Machinery Industry in 2018 by main business income and net profit. By main business income, CHEN HSONG (震雄) and YIZUMI were ranked No.2 and No.3 respectively. While by net profit, YIZUMI was ranked No.2 and CHEN HSONG was ranked No.3.For extrusion machinery, JWELL and TONGJIA (通佳) were the top two manufacturers in China by both main business income and net profit. JINMING (金明) and BEIER (贝尔) were ranked No.3 by main business income and net profit respectively.For blow molding machinery, TONGDA (同大) was the No.1 manufacturer in China, according to the list by CPMIA. Besides, TECHMATION (弦讯)）was the top auxiliary equipment and accessories manufacturer. According to the statistics of CPMIA, the total industrial production value and industrial sales value in 2017 for the 38 listed enterprises increased 30.1% and 29.9% when compared to the previous year. For the main business income and total profit, an increase of 25.8% and 30.8% were recorded respectively.Top 30 Comprehensive Strength Enterprises of China Plastics Machinery Manufacturing Industry in 2018 (Sorted by Main Business Income)Top 30 Comprehensive Strength Enterprises of China Plastics Machinery Manufacturing Industry in 2018(Sorted by Net Profit)Top 15 Enterprises of China Plastics Injection Molding Machinery Industry in 2018Top 10 Enterprises of ChinaPlastics Extrusion Molding Machinery Industry in 2018Top 3 Enterprises of ChinaPlastics Blow Molding Machinery Industry in 2018Top 5 Enterprises of ChinaPlastics Auxiliary Equipment and Accessories Industry in 2018Source: CPRJ International

Aeyoung Park 2018-09-03

Machinery production in China to rise at a CAGR of 7.5%

- Machinery production in China to rise at a CAGR of 7.5%▲ Total China machinery production revenues and growth rates from 2017 to 2022(exclusing PV and solar).Even with strong 8.1% year-over-year growth, China's machinery production is growing at a slightly slower rate in 2018 than that it did in 2017, according to the recent study by IHS Markit. Machinery production in China will continue to rise at a compound annual growth rate (CAGR) of 7.5% from 2018 to 2022.In the first half of 2018, the performance of machinery industry segments in China suffered mixed fortunes. While robots and other high-end equipment-manufacturing machinery maintained high growth rates, some traditional manufacturing-related machinery – such as agricultural machinery, paper and paperboard machinery – have different market growth expectations, due to their differing market and policy environments.As “Smart Manufacturing 2025” continues to advance, while demographic dividends disappear, labor costs increase, and machine generation accelerates, the demand for industrial robots in China has increased dramatically.According to the latest data from the International Federation of Robotics (IFR), the annual sales volume of industrial robots in China ranked first in the world for five consecutive years from 2013 to 2017. IHS Markit predicted that industrial robot production will continue to grow at 38% through 2018.Overall prospectAlthough China's machinery production growth performance was stable in the first half of 2018, there are still some unfavorable factors expected in the second half of the year, due to downward pressures on the machinery and equipment market, including the following:With Sino-US and other trade frictions on the rise, there is still a lot of uncertainty in the international environment.The infrastructure investment and consumption growth rate is declining, and the underlying economic driving force is insufficient to spur additional growth.The tightening of environmental protection policies, along with the uncertainties of industrial policy adjustment, will have varying negative short-term effects on the development of related industries. The strict supervision of environmental protection will also have negative short-term effects on the paper, printing, dyeing and other polluting industries.Source: CPRJ International

Aeyoung Park 2018-08-29

PS, PET bottle resin prices move in July

- PS, PET bottle resin prices move in JulyThe lazy days of summer proved lazy indeed for North American commodity resin prices in July, as only solid polystyrene and PET bottle resin showed any change from the previous month.For PS, a decline of 3 cents per pound occurred as prices for benzene feedstock — used to make styrene monomer — dipped 15 cents to $2.84 per gallon. That move represents a 5 percent decline vs. benzene prices for June.Regional PS prices had been flat in June after falling 4 cents per pound in May. Counting previous increases and decreases, PS prices now are down a net of 1 cent per pound for the year.North American PS sales slumped 5.5 percent in the first half of 2018. A domestic sales loss of just over 6 percent was lessened by a 19 percent surge in export sales. PS sales to resellers and distributors grew almost 10 percent in that six-month period.PET bottle resin prices declined by an average of 2 cents per pound in July after having increased 3 cents in June and 2 cents in May. Lower demand was cited as a reason for the July dip.Scattered production issues and tighter supplies of feedstocks could make regional PET markets tighter in August and September, sources said. This change could lead to flat pricing or even give regional PET makers a chance to raise prices, they added.Average North American market prices for all grades of polyethylene, polypropylene and PVC were flat in July. High and low density PE prices now have been flat for four straight months, with linear LDPE prices now flat for two months in a row after sliding 3 cents in May.In spite of a flat market, the impacts of large new amounts of HDPE and LLDPE capacity are being felt in regional demand. U.S./Canadian sales of HDPE jumped 8.8 percent in the first half of 2018, according to the American Chemistry Council, with LLDPE sales booming 16.3 percent. Exports played a big role in this growth, with LLDPE exports up an astonishing 60.2 percent and HDPE exports leaping 18.9 percent.Domestic market growth for those materials also exceeded that of U.S. GDP. HDPE sales into the domestic market were up 6.5 percent in the first half, with domestic LLDPE sales up 4 percent.Sales of LDPE — where less new capacity has been added — ticked up 0.9 percent for the half, as a 0.4 percent export loss weakened domestic growth of 1.4 percent. LDPE's nonpackaging film end market — including retail bags and trash and can liners — grew 7 percent.Regional PP prices took a rare break in July after surging 8 cents per pound in June after moving up 7 cents in May. That followed a two-month period in March-April when prices slipped a total of 7 cents.PP prices in the region now are up a net of 11 cents per pound for the year. Total price volatility for the material — including all increase and decreases — has reached 40 cents per pound.For PP, North American sales dipped 0.5 percent. A 23.8 percent decline in export sales countered a gain of 0.2 percent in the domestic market. Among major end markets, sales of PP into oriented film were up 17 percent and into injection molded caps and closures were up 7 percent.Regional suspension PVC prices were flat for the third straight month in July after moving down an average of 2 cents in April. First-half U.S./Canadian PVC growth of 5.5 percent was powered by export growth of 17 percent.Sales of PVC into the domestic market ticked up 0.6 percent. Among major end markets, PVC sales into extruded windows and doors surged upward by 31 percent in the first half.Recycled resin changesPlastics News also recently showed pricing changes for several recycled materials. In PET bottle resin, average selling prices for clear, post-consumer pellets and flake are both up 5 cents per pound since April. Prices for green, post-consumer PET flake and pellets are also up 5 cents in the same time period. These materials have been in higher demand as manufacturers work to meet sustainability goals."Demand for [recycled PET] pellet from bottle and packaging manufacturers continues to rise due to call to increase recycled plastics in plastic bottles, other containers and packaging," according to a recent report from the PetroChem Wire LLC consulting firm in Houston.For recycled HDPE, prices for multicolored, post-consumer flake are down 5 cents per pound since April. In recycled polypropylene, prices for industrial flake are down 4 cents per pound in that same time period. Both moves are the result of decreased domestic demand and increased supplies resulting from lower exports of recycled material to Asia.At the macro-feedstock level, U.S. prices for West Texas Intermediate crude oil slipped from $71.50 per barrel at the start of July to $67.75 by the end of the month for a decline of 5 percent. U.S. natural gas prices also slid, starting July at $2.85 per million British thermal units, but bouncing around before finishing near $2.75 by the end of the month for a decline of 3.5 percent.

Aeyoung Park 2018-08-29

HDPE, LLDPE drive first-half gains in U.S./Canadian resin sales

HDPE, LLDPE drive first-half gains in U.S./Canadian resin salesThe impact of new North American polyethylene resin capacity began to be felt in sales totals for the first half of 2018, with both high and linear low density PE posting big gains.U.S./Canadian sales of HDPE jumped 8.8 percent in that six-month period, according to the American Chemistry Council, with LLDPE sales booming 16.3 percent. Exports played a big role in this growth, with LLDPE exports up an astonishing 60.2 percent and HDPE exports leaping 18.9 percent.Domestic market growth for those materials also exceeded that of U.S. GDP. HDPE sales into the domestic market were up 6.5 percent in the first half, with domestic LLDPE sales up 4 percent.Among major HDPE markets, sales into gas pipe were up 23 percent, with water pipe up 16 percent for the half. In end markets for LLDPE, sales of the material into shipping sacks were up 10 percent.North America has added more than 6 billion pounds of annual PE production capacity since mid-2016 through major expansions from Nova Chemicals Corp., Dow Chemical Co., ExxonMobil Chemical Co. and Chevron Phillips Chemical. In total, North American PE production capacity is expected to add 26 billion pounds between 2017 and 2022.The discovery of newfound supplies of shale-based natural gas in the region in the last decade have made these expansions possible. Most of this new capacity has been in the form of HDPE and LLDPE.U.S. PE exports "can ramp up very quickly when world crude oil prices rise as they did in the first half of 2018 compared to the same months in 2017," said Phil Karig, managing director of the Mathelin Bay Associates LLC consulting firm in St. Louis."Crude oil prices were up over 30 percent year over year, while U.S. natural gas prices were mostly down during the same time period," he added. "As a result, many foreign PE buyers found U.S. PE prices attractive, while U.S. PE producers had less reason to lower domestic prices, even in the face of new production capacity."Esteban Sagel, principal of the Chemical & Polymer Market Consultants consulting firm in Houston, said that "looking at PE, the domestic growth rates would be reflective of a strong domestic market, which I believe is the case.""The economy is improving, employment is up and confidence is high," he added. "Growth in pipe in HDPE is understandable, as we work in a lot of shale-related infrastructure."Harvey hits pricingIn PE pricing, strong demand and the unexpected prolonged effects of Hurricane Harvey into the spring supported higher post-hurricane price increases, according to Mike Burns, PE market analyst with Resin Technology Inc. in Fort Worth, Texas."Resin processors who expected Q1 discounts were surprised when prices increased in February and have lasted for the most part into the summer," Burns said.Burns added that with hurricane-related supply issues resolved and new capacity running at better rates, suppliers will have to rely heavily on a strong export market in the second half of 2018."Exports may need to increase as much as 10 percent over the three-year average of 20 percent to maintain a balanced North American supply," he said. "And recent tariffs talks may disrupt the flow of exports until the direction is certain."An abundant supply of PE "is contributing to U.S. resin export growth in particular," according to Paul Bjacek, market analyst with the Accenture Research in Houston. "This will pull up [LLDPE] shipping sacks as well, as plastics are typically packed in shipping sacks for loading into overseas containers."First-half sales for other commodity resins represented a mixed bag. PVC sales posted solid gains, while sales of LDPE and polypropylene essentially were flat and sales of solid polystyrene declined.U.S./Canadian PVC growth of 5.5 percent was powered by export growth of 17 percent. Sales of the material into the domestic market ticked up 0.6 percent. Among major end markets, sales of PVC into extruded windows and doors surged upward by 31 percent in the first half.Construction growthThe PVC market "is, has been and will continue to be driven by various housing market applications such as vinyl siding, windows and drain and waste pipe," Mathelin Bay's Karig said. U.S. housing starts "were strongly up year over year through May, and though they were down in June, there was more than enough momentum to keep U.S. PVC sales strong during the first half of 2018."PVC export sales "also benefited from low-cost natural gas, making U.S. producers competitive in the world market, as well as from continued growth in the global economy, including housing," he added. "Looking forward, the big question marks are whether tariff spats and elevated oil prices will cause global growth rates to begin to cool."Construction has been performing relatively better than manufacturing in the first half, Accenture's Bjacek said, with overall construction spending rising 5 percent. This trend should help explain the strong performance of PVC in construction applications, he added.LDPE sales ticked up 0.9 percent for the half, as a 0.4 percent export loss weakened domestic growth of 1.4 percent. The nonpackaging film end market, including retail bags and trash and can liners, grew 7 percent.For PP, North American sales dipped 0.5 percent. A 23.8 percent decline in export sales countered a gain of 0.2 percent in the domestic market. Among major end markets, sales of PP into oriented film were up 17 percent and into injection molded caps and closures were up 7 percent.Karig said that the PP market "was very much a mirror image of the PE market in the first half of 2018 as it has been for most of the last few years."PP producers "found themselves suffering from elevated feedstock costs and limited feedstock supply," he explained, "while foreign producers stand ready to ship PP to the U.S. whenever U.S. producers attempt to recover their cost increases or try to increase their margins."PS slidesU.S./Canadian solid PS sales had a very difficult first half, with overall sales sliding 5.5 percent. Export growth of 19 percent allowed for a slight improvement on a domestic sales slump of 6.1 percent. Sales of solid PS to resellers and distributors provided a bright spot by growing 10 percent for the half.The resin statistics also reflect a 4.9 percent first-half increase in consumption of nondurable goods, which "tend to do relatively well throughout economic cycles," according to Bjacek.However, he added, the weaker performance of PP and PS is likely related to their greater share of demand in durable goods, which rose slightly less — 4.6 percent — during that time. U.S. auto production is a notable area of weakness, Bjacek said, declining by 13 percent in this period and likely contributing to weaker PP sales.Commenting on overall resin sales in the region, Bjacek said that strong resin sales data is linked primarily to robust economic growth, with U.S. real GDP rising over 4.1 percent in the second quarter. In addition, he added, growth is contributing to stronger world demand, as U.S. GDP accounts for more than one-fifth of world GDP.But "a key risk," according to Bjacek, is the lack of consistently strong durable goods production. "Consumers buy less durable goods when there is uncertainty," he said. "Any declines there can signal the beginnings of a downturn. Producers should watch durable figures and be actively pursuing stronger growth applications, as well as financially strong customers, to protect themselves in a downturn."

Aeyoung Park 2018-08-22

Taiwan plastics firms see gains in China-US trade war

Taiwanese equipment makers are capitalizing on the emerging U.S.-China trade spat, but may be hurt if the disagreement lingers, executives said on the first day of Taipei Plas."Taiwan is actually the beneficiary of this trade war, because if the U.S. increases the tariff on machinery imported from China, it means Taiwan machinery is going to be even cheaper [for U.S. buyers]," said Larry Wei, president of extrusion machine maker Fong Kee International Machinery Co. Ltd. and a board member of the Taiwan Association of Machinery Industry."Starting last year, we saw more and more Taiwanese machinery sold to the U.S. market," Wei said, with his firm seeing a 20-plus-percent jump in sales to the United States.Larry Wei, president Fong Kee InternationalMachinery Co. Ltd. and board member of Taiwan Association of Machinery IndustryIn the short term, the combination of 25 percent U.S. tariffs on Chinese plastics equipment, which started July 6, and the favorable business reaction to President Donald Trump's policies are fueling stateside demand for Taiwanese production equipment, said Alan Wang, chairman of TAMI's plastic and rubber machinery committee."Our machinery sales to the United States actually have increased," he said.But executives fretted over longer-term impacts if the trade war dampens demand for new equipment, particularly in China, which is Taiwan's largest export market for plastics equipment.Wang noted that the mainland purchasing managers' index, a leading reflection of corporate confidence, took an ominous dip in May and June."[In] the long term, we think that [the trade dispute] might affect the willingness to invest," he said. Last year, Taiwan supplied almost five times as much plastics equipment to China as it did to the United States, TAMI said.In the plastics world, Taiwan definitely punches above its weight. The small island with a population the size of Texas is the world's sixth-biggest exporter of plastics machinery, ranking behind only Germany, China, Japan, Italy and the United States.Exports of Taiwanese plastics and rubber machinery jumped 12.8 percent last year to $1.17 billion, said TAMI Chairman Alex Ko.Sales to mainland China grew a healthy 27 percent to $247.61 million, accounting for 21 percent of Taiwanese plastics machinery exports.Taiwan has a strong focus on Asian developing markets. Sales to its second-biggest export market, Vietnam, edged up 2.3 percent to $139.5 million, followed by India, up 44 percent to $91.69 million.Sales continued to grow in the first five months of this year, Ko said. China and Hong Kong imported $97.93 million in Taiwanese machinery, up 2.3 percent from the year-before period, followed by Indonesia and Thailand. But sales to India have dropped a sharp 24.8 percent.Still, TAMI President Cheng-Ching Wang called on the industry to make a more concentrated effort to penetrate markets in the Middle East, Africa, South America and Eastern and Central Europe. Altogether, they represent less than 10 percent of Taiwan's exports, Wang said.The candid trade-war assessments weren't the only geopolitical notes to creep into the usually apolitical trade-show talk.Michael Wang, general manager of Chen Hsong Machinery Taiwan Co. Ltd. and vice chair of TAMI's plastic and rubber machinery committee, said his firm's once-thriving sales to Iran have vanished in the wake of the Trump administration's re-imposition of sanctions on Iran.The trade show, which says it's Asia's third-largest plastics show behind Chinaplas and Japan's IPF, also will include a focus on beefing up Taiwan's Industry 4.0 next-generation manufacturing capabilities, executives said, although they acknowledged more research needs to be done locally."Take my company, Fong Kee, for example. Most of our sensors for our blow molding machines are imported," Wei said. "This is an area where we really need to catch up."But executives noted some progress in making servo motors, a key component for all-electric injection molding machines. Taiwan now has two domestic manufacturers that can compete with foreign offerings."The situation has greatly improved compared to the last Taipei Plas [in 2016]," Alan Wang said.Another highlight: stronger collaborations among the government, universities and companies to train engineers needed for the new world of smart manufacturing, said Bush Hsieh, managing director of Taichung-based blow molding machine maker Chumpower Machinery Corp. and a vice chair of TAMI's plastic and rubber machinery committee.Chumpower has already worked with students on government-sponsored Industry 4.0 projects twice. "The [key performance indicator] will be whether these students are recruited," Hsieh said.Thomas Huang, executive director exhibitiondepartment, Taiwan External Trade Develop-ment CouncilExecutives said plastics pollution is a particular concern in Taiwan, which has some of the strictest recycling laws in the world. Executives talked up savings on the production end, as electric injection molding machine use less energy than hydraulics and don't leak oil.But much more research needs to be done on the recycling end, which is still too reliant on manual labor, they said."Separating PET caps and bottles must be fully automated," said Alan Wang. "Recycling technology needs to be upgraded."Thomas Huang, executive director of the exhibition department of the Taiwan External Trade Development Council, called on resin makers to "focus on developing [formulas] so that the material can be better recycled and reused."Taipei Plas runs through Aug. 19. Show organizers anticipate 18,800 visitors from around the world.

Aeyoung Park 2018-08-20

US-China trade war: 5 suggestions from the Chinese plastics processing industry

The escalating US-China trade war is hitting the plastics industry of both countries. From the reliable sources of CPRJ, we've learned that some leading manufacturers and OEMs in China have already been suffering from the economic turmoil.“Our customers from the US have stopped ordering from us,” the director of a leading Chinese manufacturer of plastic films and garbage bags told CPRJ.“Our collaboration project with the US has been halted. As soon as the US waged a trade war against China, we suspended the project, as we don't know who will pay the extra 25% tariff,” said a Chinese auxiliary equipment supplier.In order to manage the crisis and minimize the damage of the US-China trade war, the Chinese plastics processing industry has suggested five measures.1. Tax exemption“The number of plastics processing machines exported to the US from China has increased by 84% in 2017 when compared with the previous year, and the value has increased by 47%. With the extra tariffs, Chinese machines would lose its advantage in price,” commented Su Dongping, Secretary-General of China Plastics Machinery Industry Association.However, the impact on Chinese machine builders is still manageable, she said. “For example, the US market accounts for only 4 - 10% of the total turnover of some leading Chinese manufacturers like Haitian (海天), Yizumi (伊之密) and Borche (博创).”She suggested the Chinese enterprises should request for exclusion via the Product Exclusion Process for Chinese Products Subject to Section 301 Tariffs released by the Office of the U.S. Trade Representative (USTR).2. Call for subsidiesWang Wenguang, Secretary General of Shenzhen Polymer Industry Association, told CPRJ that some member enterprises are expecting subsidies from the Chinese government to alleviate their plight.3. Tax cut to increase domestic demand in China“If the Chinese government is able to cut corporate value-added tax and personal income tax, enterprises will have more resources for research and development, and people will have more consumption power,” a plastics industry player commented. “In that case, we will have a stronger driving force for innovation and domestic demand.”4. Increase overseas investmentInvesting in new production facilities overseas is another solution. CPRJ has learned that a big Chinese plastic tableware manufacturer is planning to expand its production capacity in the US. Another plastics processing enterprise also said that it will consider producing in other countries in Southeast Asia.5. Boost innovationThe US is levying the extra tariffs against Chinese products that are relatively easy to find substitutes in the market. As long as Chinese products are of higher innovation, technology and quality, they will not be so easily replaced or subject to tariff threats.In 2017, China exported US$15 billion worth of plastic products to the US, representing 23.97% of the total export of plastic products. The US is the biggest export market for Chinese plastics processing machinery in the same year, accounting for 10.89% of the total, with a value of US$244 million.Source: CPRJ International

Aeyoung Park 2018-08-20