While the troubled Asian economy is definitely on the minds of resin industry executives and analysts contacted recently, the degree of concern varies. All agree, however, that Asia's economic tigers bear watching in 1998.
Economies in such countries as Thailand and Indonesia began to collapse last summer when stocks and currency values plummeted. Through November, Asian stock markets had lost a collective $400 billion in value since the beginning of the year.
The International Monetary Fund and other financial institutions have provided Thailand with a $17 billion aid package, while Indonesia has received $23 billion and South Korea may eventually receive as much as $50 billion.
All of this instability has led the plastics industry to expect lower exports to the region in 1998 and question the likelihood of projects announced in several Asian nations.
``Asia's the wild card right now,'' said Bruce Kleinert, ABS product manager for Bayer Corp. of Pittsburgh. ``You can say they're devalued and cheaper vs. the dollar now, but the other argument is that with the bailouts they won't be lending as much as in the past.''
Bayer's parent company, German chemical giant Bayer AG, is still confident of Thailand's potential. In October, the company confirmed plans to invest more than $275 million in engineering plastics and chemicals in Thailand by 2002.
Dow Chemical Co. of Midland, Mich., derives 10 percent of its plastics sales from the Asia-Pacific region. The company plans to open a major polyethylene plant in Map-Ta-Phut, Thailand, in 1999.
At Dow's Dec. 12 press briefing in New York, Anthony Carbone predicted markets in Europe and North America won't see a ``second-wave effect'' from Asia's economic turmoil.
``We're heavily invested in Asia and we'll have to deal with the aftereffects of devaluation,'' said Carbone, Dow Plastics' executive vice president of plastics, hydrocarbons and energy. ``We could see much greater weakening in Korea and possibly Japan than we had imagined.''
The short-term effect on resin volumes and pricing could be serious as well.
``I'm very concerned about Asia Pacific because of export volumes,'' said Rob Harvan, a consultant with Houston's Bonner & Moore firm. ``I think we'll see a reduction in exports from the U.S. into Asia and more aggressive moves to try to bring resin from Asia into North America because of low prices on derivatives.''
U.S. thermoset and thermoplastic resin exports were on track to grow by 2.4 percent in 1997, according to the U.S. Census Bureau, but that total might not be matched in 1998.
``If you look at import prices in the third quarter for polyethylene and polypropylene, you already see a slow but steady downward trail,'' Harvan added.
PET also is seeing some immediate impact, with some U.S. processors seeing Asian resin available for about 10 cents less per pound than current domestic prices.
``It's always in the back of [processors'] minds that they can go to Asian material,'' said Phil Myers, business marketing manager for container plastics at PET leader Eastman Chemical of Kingsport, Tenn. ``There's a lot of Asian capacity and growth hasn't absorbed that capacity.''
Myers added the availability of Asian resin also hurt the PET market in 1995 and 1996.
PP exports should still be around 10 percent for Amoco Polymers of Alpharetta, Ga., but PP business director Tom Sennett said some of those sales may be redirected to South America or the Middle East.
The time lines of several scheduled projects could also be affected. In addition to the Bayer and Dow initiatives, Dutch-based Montell Polyolefins plans to open a PP compounding plant through a joint venture in Hong Kong this year, while Germany's Hoechst AG plans to build a $100 million biaxially oriented PP plant in Thailand.
``A lot of financing for petrochemicals and plastics was a house of cards,'' Harvan said. ``Some of these plants may not open on time and some may never get built.''
``Asia theoretically has a lot of capacity coming on, but a number of them are likely to get canceled,'' said Dave Clarke, vice president of polymer sales and marketing for Calgary, Alberta-based Nova Chemicals. ``The question is will demand drop off or not.''