The plastics industry experienced slow growth last year, which should persist into 1997 before accelerating to above 5 percent in 1998 and 1999, according to a new industry forecast. The ``Sixth Annual Plastics Industry Outlook, 1997-1999,'' released last week by CIT Group, a Livingston, N.J., business development and economic research firm, forecasts the higher growth rate through 1999, when real shipments of plastic materials should reach $123.6 billion - 15.8 percent above current levels. CIT supports its favorable forecast by citing optimistic views of the overall economy, low inflation, continued popularity of plastics, continued development of new applications, and an improving image for plastic.
``It really is sort of a boring report, perhaps that is too strong, but we really don't see any great rises or falls,'' said CIT Group Vice President Michael R. Paslawskyj. ``Certainly our predictions of growth are absolutely dependent on the continuing growth of the economy overall. Should there be a recession, the industry growth would also retreat.''
The CIT report said prices for plastic resins could be expected to rise over coming months, continuing what CIT called ``a roller coaster.'' The report traces a 30 percent run up in resin prices between April 1994 and May 1995, and then a drop of about 14 percent through April of this year. However, resin prices moved sharply higher in May, triggering fears that another double-digit increase may be coming.
CIT noted that conditions in resin markets are tightening, and that capacity utilization may hold the key to coming increases. The report says capacity utilization, which fell below 90 percent last year, had climbed back to nearly 93 percent by March.
``If the usual lagging relationship between capacity utilization and prices holds,'' the report says, ``additional price gains in the resin markets can be expected over the coming months.''
Paslawskyj, however, said the report does not predict resin prices to move above previous highs, because market growth for manufactured products will not accelerate until 1998 at the earliest.
The report predicts that growth will be strong, particularly in the electronics industry, followed by household plasticware, with limited growth in the health-care field. CIT's report projects very slow growth in the construction industry and only minor gains in the automotive sector, driven solely by product substitution.
The report predicts that annual growth of consumption in electronics will be about 5.8 percent, while consumption of health-care products is expected to rise 4 percent per year.
Consumption of household plasticware is predicted to rise 5 percent per year in the 1995-99 period, while motor vehicles with a 3.6 percent annual growth rate, and construction, with a 2.7 percent rate, should see the smallest annual growth.
While it traced a deterioration of the U.S. trade position for manufactured plastic products in 1995, the report notes that a trade surplus still exists. The surplus narrowed from $660 million in 1994 to $419 million in 1995. The report speculates the surplus will grow by 1999 to about $1.2 billion.
By 1999 CIT projects ex-ports of manufactured plastic products from the U.S. will reach $8.46 billion, 25 percent above 1995 levels. On an annual rate, adjusted for inflation, that would mean an annual growth rate for manufactured plastic products exports of 5.1 percent, considerably above the 3.6 percent predicted for domestic consumption.
Imports, likewise, are predicted to reach $7.3 billion, or 14.8 percent above 1995, but the imports are expected to see a decline in their share of the domestic consumption from 6 percent to about 5.8 percent over the survey period, due to insignificant appreciation in the value of the U.S. dollar.