Mel Ettenson’s Global Plastics News
IAPD is pleased to welcome Mel Ettenson as a guest columnist each month in the IAPD News offering unique content for IAPD members.
The column below is only a sample of the Global Plastics News. If you are interested in learning more about the entire publication, visit www.globalplasticsletter.com.
THE GLOBAL ECONOMY:
Figure on another tepid year for the economy with growth at most about 2 percent with Europe lagging and China slowing from previous higher growth rates. Next year is expected to be closer to 3 percent growth, although the “d”s (dire depression) may dominate if Europe continues to hemorrhage and China continues to slow. The emergence of South Africa, Brazil, Russia and India as higher than average global growth rates could lift all boats. Additionally, the balance of the African continent is beginning to emerge as better than third world countries with selective high growth using the continent's vast natural resources and low wage rates. The effects on our industry will mostly be felt by the re-emergence of the global auto industry which is filling drivers' needs in developed and developing countries. Also expect the mining and energy industries to create larger demand for plastic applications in other countries, shadowing that of North America and Europe. There is not much talk about inflation lately but expect a doubling of the rate (now 2 percent) by 2020, if anyone can see that far ahead.
Don't read too much into recent drop in gasoline prices. It's too soon to judge if 2012 prices have peaked. Middle East unrest, refinery snafus, summer travel and other factors could emerge to cause selective spikes in oil prices. Enhanced oil recovery (EOR) will become more important, especially in aging oil fields in the U.S. The payoff could be on the order of tens of billions of barrels. Natural gas continues to be plentiful and thus at historic low prices, more than compensating for any oil hikes or shortages. Energy demands from the BRICS growth economies could put upward pressure on oil, although in the case of the African continent there is some residual oil capacity, especially in Nigeria, thus causing some self-reliant supplies.
Plastic resin prices, especially in the case of commodity polyolefins and other lower price thermoplastics such as PS, continue to exhibit depressed level pricing. PC, ABS have some upward movement, while the HPMs continue to have selective single digit jumps in prices. Benzene, a major building block has upward pressure due to supply concerns. As demand increases and capacity adding lags due to tight capital and long expansion lead times, some ETP prices could inflate within the next 12 months.
SABIC IP expands PC multi wall sheet capacity in India. Georg Fischer acquires Independent Pipe Products in Texas, USA, a company with annual sales of US$50 million. Honeywell has discovered a process to produce ethylene from methane in natural gas instead of costlier sources such as ethane from naptha in oil refining. Evonik offers nylon 12 alternatives while its plant in Germany is repaired.
Look for continuing consolidation in pipe sector as well as in profile extrusions. Selectively, smaller, family-owned distributors could still be sought after. Some shifting in MMA and PC sheet, especially multi wall, capacities could take place this year. Investments in developing country manufacturers and distributors should continue.
About Mel Ettenson
THE GLOBAL PLASTICS LETTER is a quick, highly informative plastics newsletter - to the point and timely enough to act on. In just four pages it packs relevant news, information and insights, with a primary focus on sheet, rod, tube and film, plastic semi finished shapes, plastic basic shapes, semi-finished plastics, plastic sheet rod tube and film. The newsletter covers pricing trends, market moves, new and upcoming products and services in the plastics industry.