Extrusion International USA 1-2022

28 Extrusion International 1/2022 INDUSTRY NEWS The US Plastics Industry in 2021 By Perc Pineda, PhD, Chief Economist, Plastics Industry Association „ “Time fl ies when you’re having fun. And this year went fast. But I’m not sure if it was all fun for the US plastics in- dustry in 2021. After all, the plastics industry continues to face challenges from the pandemic. As the year closes in a few days, the U.S. plastics industry performance in 2021 can be summarized in seven charts. Industrial Production of Plastics Products Manufacturing Low plastics material and resins supply caused the plas- tics product manufacturing to slow earlier this year but turned around after May. Although resin production has increased, the plastics industry continues to face labor shortages. However, it appears that plastics production has been running on high gear to meet higher demand for plastics and plastic products. In November, plastics produc- tion was up 7.1% from a year earlier. Compared to the end of the COVID-19 recession in April 2020, plastics products manufacturing rose 23.0%. With 2021 expected to end on a high note, a 4.5% increase in plastics production can be expected in December year-on-year. Plastics and Rubber Shipments Plastics and rubber shipments have been increasing since February this year. It increased 7.5% in October from a year earlier to $22,019 million, according to the latest estimates of the U.S. Census Bureau. Business conditions remained favorable in November and assuming that’s unchanged in December, this year could close with shipments 9.5% high- er than December last year. Plastics Manufacturing Employment The US plastics industry continued to experience low labor supply in 2021 – re fl ecting the economy’s labor participa- tion rate that appears to be stuck around 61.0% since June last year. Plastics products manufacturing saw an increase in employees in August reaching 598.6 thousand. The US Bureau of Labor Statistics estimates plastics manufacturing employees at 597.7 thousand in October. Considering the low supply for workers, it is unlikely that hiring increased dramatically in November, albeit in November plastics and rubber unemployment was estimated by BLS at 1.5%. This means that November and December plastics manufactur- ing employment could be at 596.3 and 596.2 thousand, re- spectively. Molds for Plastics Trade This year saw stable plastics molds exports. Except in Feb- ruary, where exports were $39.9 million, plastics molds exports stayed above $40.0 million through October. May and August exports at $53.1 million and $57.3 million, re- spectively. It is projected that the two remaining months of 2021 will continue to see exports above $40.0 million. Molds exports in 2021 are less volatile than in 2020. How- ever, the uneven pace of emergence between countries from the pandemic could cause only moderate increases in molds exports in 2022. Producer Prices in Plastics Material and Resins Manufacturing After many years of stable resin prices, 2021 saw prices climbed into double-digits due to ongoing interruption of the pandemic and adverse weather conditions that caused resin shortages. While the causes of resin shortages have been analyzed by many industry observers, strong demand for plastics and plastics products sustained elevated prices throughout 2021. However, data suggest that resin prices peaked in the summer months – price increases moder- ated thereafter, which is expected through December. It remains to be seen when prices will return to their pre-pan- demic levels. Given that supply chain issues could remain unresolved – at least in H1-2022 – resin prices could remain elevated, but the rates of increase will continue to moder- ate as resin supply catches up with resin demand. Capacity Utilization in Plastics Material and Resins Manufacturing The plastics material and resins manufacturing capacity uti- lization rates averaged 88.0% in 2019 and 2020. This year could see that rate to average lower, at 83.1%, as supply continues to adjust. While the pandemic affected capacity utilization, adverse weather had a larger negative impact on capacity utilization than the pandemic per se. There is ample room for plastics material and resin manufactur- ing utilization rate to expand, which could be expected in 2022. Plastics Machinery Imports Although the US manufacturing sector continues to grap- ple with supply chain issues, 2021 is looking to be a banner year for US plastics machinery. Demand has been running hot – in primary machinery types and auxiliaries – as con- verters deal with higher demand. Helped by low-interest rates to fi nance equipment investment, low labor supply caused processors to enhance productivity through plastics equipment and auxiliaries. Data shows that plastics ma- chinery imports have stayed stable in 2021 as equipment suppliers continue to service robust demand. In October, plastics machinery imports totaled $305.5 million – a 15.0% increase from a year earlier. While imports could slow in November and December, the likely scenario is from plas- tics machinery imports to increase 13.2% from 2020.“ The Plastics Industry Association (PLASTICS) plasticsindustry.org Perc Pineda, Ph.D., Chief Economist of PLASTICS