Feel the earth moving beneath your feet? Is the room spinning? Do you turn the steering wheel left, only to find you're going right?
If you answered yes to any of the above, you just might be in the North American resin market.
2007 ended pretty much as it began, with a good deal of turmoil and with big checks being written. Power player Dow Chemical sold half of its venerable polyethylene unit - and half of its polypropylene and polycarbonate assets - to Petrochemical Industries Co. of Safat, Kuwait, for $9.5 billion. At the same time, two longtime commodity suppliers - PVC maker Georgia Gulf Corp. and PET producer Wellman Inc. - came close to defaulting on financial covenants.
Those deals came on the heels of mega-deals in which GE Plastics, Huntsman Corp. and Lyondell Chemical Co. each changed hands. Global PET leader Eastman Chemical Co. also retrenched almost solely into North America as a lack of feedstock integration hampered its international assets. The same problem hurt Wellman in North America.
Even a once-dependable market like polystyrene has been rocked by rising feedstock costs, resulting in almost 20 percent of North American capacity - almost 1 billion pounds of material - vanishing since early 2006. Joint ventures have reduced the regional PS field to a mere three suppliers and Dow limited its ABS production to a single site and exited all ABS markets but automotive.
At the same time, more than 2 billion pounds of new capacity for PE and PP are set to open in the Middle East over the next three years. Market watchers say it's only a matter of time until this material reaches North American shores.
Where can solace be found? Where does hope yet dwell?
Well, first off, we're talking about giant markets here. North American PE sales alone were in the 30 billion-pound neighborhood this year - and that's not even counting exports, which skyrocketed as the U.S. dollar fell. Domestic PP sales accounted for another 16 billion pounds. The Saudis and Iranians won't be taking those markets overnight.
And if the dollar rebounds - as it eventually will - exports naturally will decline, making more material available for use. That might strike some as a lemonade-from-lemons argument, but we're talking about almost 7 billion pounds of PE and about 2 billion pounds of PP that set sail from North America in 2007.
Even PVC - with a domestic market of more than 12 billion pounds - should be able to weather the storm, though some market watchers expect expansions announced for 2008 and 2009 to be postponed somewhat as the industry awaits a housing market rebound. Georgia Gulf's problems are tied into its downstream acquisition of construction-heavy Royal Group.
These, then, are the ``interesting times'' we've heard so much about. As always, preparation and an open mind are key to healthy resin-buying for North American processors.
Of course, it still wouldn't hurt to give your local resin sales rep a hug the next time he or she pays you a visit.
Frank Esposito is a Plastics News senior reporter based in Akron.