Staff reporter Frank Esposito gathered the following briefs at the Plastics News Executive Forum 2003, held Jan. 26-29 in Phoenix.
More resin makers to do compounding
Integrated resin makers will do more of their own compounding in 2003, while the percentage of resin that uses concentrates will increase as well.
That pair of outlooks comes from John Jones, president of Applied Market Information LLC, a consulting firm in Wyomissing, Pa.
Integrated firms - such as GE Plastics, DuPont and BASF Corp. - made up 23 percent of the North American compounding market in 2002, trailing both independent compounders at 25 percent and end-use compounders at 52 percent, according to AMI.
``This should be a significant lesson for all compounders,'' Jones said. ``If it's not economical for your customer to buy a [compounding] service from you, there's not a whole lot to stop him from doing it on his own.''
Jones also said he sees growth in concentrates, in spite of an increase in closings caused by lean economic times. By AMI's count, nine North American concentrate makers have closed since mid-2000. By comparison, only five such firms closed in the 1995-2000 period.
Resin Technology adds 4 to work force
Resin Technology Inc., a Fort Worth, Texas-based consulting firm for resin buyers, has added four employees since September.
The firm had planned to add two workers by the end of 2002, but quickly added two more by hiring specialists in international sourcing and color compounds and concentrates.
RTI negotiated contracts for more than 1 billion pounds of resin in 2002. The firm receives half of the amount it saves clients by buying resin, but if its clients don't save, RTI gets nothing.
``You can throw up your hands and accept whatever [resin] suppliers offer or you can evaluate all the variables and use that knowledge to your advantage,'' said RTI managing partner Gus Garrett, who joined RTI last year after a 36-year career with resin maker Dow Chemical Co.
PET market may feel short-term pressure
The North American PET market can expect short-term pricing pressure, due in part to tightness in PET feedstocks ethylene glycol and paraxylene.
Ethylene glycol is likely to be tight this year and into 2004, while paraxylene tightness could continue into 2005, as that product recovers from a four-year trough, according to Chase Willett, director of polyester and polyester raw materials for Chemical Market Associates Inc., a consulting firm in Houston.
The near-term result has been a 5 cent-per-pound increase in average selling prices for North American PET. Another 5 cent hike is on the table for March 1.
Looking ahead, Willett said annual growth of PET demand in the Americas should equal 7 percent from 2002-07, a drop from the 11 percent annual growth rate it enjoyed from 1997-2002.
Excess capacity also could be a big market factor through 2005. Almost 1.5 billion new pounds is slated for North America in that period, Willett said, with another 1.8 billion pounds available from potential conversions of PET fiber lines.
Asian material also is entering North America in greater volumes. Asian PET imports totaled 440 million pounds in 2002, a jump of almost 43 percent from the previous year. Although that number is rising, logistics costs are inhibiting the wholesale move of Asian material into North America, Willett added.
``You could shut down [PET production in] North America and supply the region with the excess from Asia,'' he said.
In the end-use arena, the massive carbonated soft drink (CSD) market continues to dominate, even though annual growth has slipped to 2-3 percent.
``The problem in North America is finding the next big application,'' he said. ``Bottled water came along just as CSD was slowing down. Beer has potential, but it's not the same dynamic as CSD.''
TPOs gain vs. PVC, but have way to go
Thermoplastic polyolefin use is on the rise, but the materials still have to climb the PVC mountain to gain greater acceptance.
``Soft TPOs can replace [styrenic block copolymers] today based on price,'' said Faisal Syed, plastics project manager for Chemical Market Resources Inc. in Houston. ``And once [TPO] costs come down, they'll replace other materials.''
Syed estimates soft TPOs have only 4 percent of a $7.5 billion application market in which PVC holds a 93 percent share.
Global use of soft TPOs hit 430 million pounds in 2001, with half of that demand in North America, according to CMRI. Automotive uses, including under-the-hood parts and interiors, accounted for 29 percent of the total.
These Executive Forum speakers' slide presentations can be viewed online at www.plasticsnews.com/forum2003/presentations.