U.S. plastics industry prospects continue to inch upward and generally show promise for growth throughout 2005, according to data released May 2 by the Society of Plastics Industry Inc. in Washington.
Production capacity utilization by plastic and rubber processors hit 84.8 percent in March, according to Federal Reserve Board data, the highest monthly level since April 2000, said Bill Wood, president of Mountaintop Economics & Research Inc. in Greenfield, Mass. That rate is up a full 3 percentage points from the year-ago period, said Wood, who analyzes economic and machinery-shipments data for SPI's Committee on Equipment Statistics.
Sustained operating rates above the 85 percent level typically trigger increased spending on new equipment, according to Wood, who noted that ``the data are currently on a trajectory that will hit 85 percent in the second quarter.''
Wood spoke at the joint spring conference of the SPI Machinery, Molders & Moldmakers Divisions in Phoenix.
He noted that overall capital spending continues to increase, though many sectors saw a falloff in first-quarter 2005 compared with the previous quarter, due in part to seasonality trends and to ``some slight negative effects'' of the bonus depreciation program that expired at the end of last year.
But plastics machinery shipments, for the most part, are on the rise.
Companies participating in the CES survey - manufacturers or importers of primary plastics machinery in the United States - shipped a total of $239 million worth of product, excluding components and auxiliary equipment, in the first three months of 2005. That figure was up 16 percent from the $206 million shipped in the same year-ago period, but down 11 percent from the $269 million shipped in the fourth quarter of 2004.
SPI predicts U.S. primary machinery shipments will increase 12-15 percent for all of this year.
Following is a summary of CES' first-quarter statistics and projections.
The 888 injection molding machines shipped in the first quarter this year represent a 5 percent increase from a year ago, and an 8 percent decline from the previous quarter, but the segment is on track to expand 10-15 percent overall this year. Significantly, press suppliers appear to be fetching better prices for their products, with the total dollar value for the quarter - $203.8 million - up 21 percent from 2004's first quarter, and down only 3 percent from the strong total registered in the last quarter.
Extrusion equipment sales typically boom in the year's final quarter, and 2004 was no exception.
As a result, first-quarter 2005 shipments of 196 extrusion machines - including single- and twin-screw models - represented an increase of 4 percent over the same period a year ago, but a 29 percent drop compared with the previous quarter. Still, key end markets for extruded products - construction and retail-sales packaging - look as if they will remain relatively strong for the rest of the year, which bodes well for capital investment in the sector.
The small and occasionally volatile blow molding machinery sector has proved a drag recently on overall plastics equipment numbers, according to Wood. While the 20 units shipped in the first three months of 2005 equaled the number shipped in the year-ago period, the dollar value of those shipments was 31 percent lower. Shipments were down 25 percent in units and 47 percent in value from fourth-quarter 2004.
``This decline in blow molding equipment data contrasts with the rising trend in the production of blow molded products that has prevailed during the past two years,'' Wood said. SPI expects the sector to reverse its slide this year and increase unit shipments 10 percent.
Bookings for auxiliary equipment totaled $84 million, up 2 percent from the same year-earlier period, but down 2 percent from the previous quarter.
``Overall, demand for auxiliary equipment continues to be solid and the market remains in a recovery phase,'' the SPI report said. The sector has posted solid growth in each of the past five quarters, which the report noted is a good sign for the entire plastics machinery industry, since ``the trend in total auxiliary equipment bookings is typically a good leading indicator of primary equipment shipments.''
Shipments of extrusion screws and barrels increased 6 percent, while injection molding components declined a similar amount.
Total shipments of injection molding and extrusion components (screws and barrels) totaled 4,889 units, down 2 percent from a year ago and 1 percent from last quarter. Despite that modest slide, market demand for such components is expected to grow 10 percent for the entire year, as processor capacity utilization continues to rise.