Staff reporter Frank Esposito gathered these items at Plastics News' Executive Forum, held Feb. 28 to March 2 in Litchfield Park, Ariz.
PP reinvestment will take some time
Polypropylene prices and profits may have to stay at current levels for an extended period to convince PP makers to add capacity in North America, according to an executive with global PP leader Basell Polyolefins.
The spread between monomer and resin prices is back to a level last reached in 1995-96, said Craig Blizzard, North American PP marketing director at Basell.
That level, along with widespread availability of propylene monomer, led to a massive capacity buildup in the late 1990s, which was met by shutdowns when profits collapsed after 2000.
``You'd have to see [wide margins] for several years to get the courage to go to your board of directors and ask them to fund reinvestment in new capacity,'' Blizzard said.
Blizzard, who is based in Elkton, Md., added that high freight costs and other expenses have limited PP makers' profits.
Product cycles shrink as distribution grows
The rise of technology in consumer product distribution is shrinking both product life cycles and product size, said Dwight Morgan, president and chief executive officer of color concentrate maker Accel Corp. in Avon, Ohio.
``Distributors know instantly what's selling and what's not selling,'' Morgan said. ``They know what they want on their shelves. Shelf space is very important.''
Morgan added that the rise of private-label products also has caught the attention of those in the color field.
``We used to match Coke red, now we're matching Target red,'' he said.
Gas prices to slow petrochemical growth
U.S. petrochemical growth will slow, as technology allows a smaller number of refineries to produce the same amount of oil and plastic raw materials.
That's the expectation of Peter Killen, senior adviser with the Muse Stancil consulting firm in Houston.
In the last 25 years, the number of U.S. refineries has plummeted from 325 to 160, but daily oil production hasn't shrunk nearly as much, going from 18 million barrels per day to 17 million.
More directly, high natural gas prices - which spiked from $2.20 per unit between 1990 and 2000 to $4.80 from 2001-04 - may have permanently removed the cost advantage enjoyed by the U.S. petrochemical industry, Killen said.