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December 15, 2008 01:00 AM

CMAI: Resin price swing faster than predicted

Stephen Downer
Correspondent
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    Some U.S. retailers have considered buying their own resin or buying plastics resin futures as a means of dealing with wildly fluctuating commodity pricing, according to a resin consulting firm.

    Howard Rappaport, global business director for plastics and polymers for Houston-based Chemical Market Associates Inc., said the situation in the industry is changing so drastically that, statistically, it's nearly impossible to keep up.

    Rappaport was among the speakers at an annual conference in Ixtapa Zihuatanejo organized by Anipac, or Mexico's National Association of Plastics Industries.

    ``I made these slides a week ago,'' he said, alluding to his graphic support material, ``and now they're out of date.''

    In an interview after the speech, Rappaport said the industry is ``in a transition phase.''

    ``We at CMAI projected we would be entering this phase, but not at the velocity we are seeing. And nobody anticipated that you would have the economic crash and oil prices cratering at the same time.''

    CMAI predicts the global economic growth rate will be below 1 percent in 2009.

    ``There's no doubt we're in a recession. The good news is we [at CMAI] show significant recovery from 2010,'' he said.

    ``We expect more plant shutdowns in the coming months. The smaller, high-cost facilities are being looked at very carefully.''

    Mexican economic analyst Erick Guerrero Rosas painted a rosier picture of Mexico. Mexico's economy could be about to enter a period of growth during the next few years, he said. However, there also was the potential for serious problems after 2012.

    President Felipe Calderon's national infrastructure program, announced several weeks ago, through which the government plans to build more highways and improve railroads, airports and telecommunications, would allow Mexico to avert the worst of the global downturn.

    By the time he relinquishes the presidency in 2012, Calderon wants Mexico's annual economic growth to be between 5-6 percent, Guerrero said.

    Guerrero, also financial commentator for Mexican television network TV Azteca, said Mexico will start receiving more investment in the petrochemicals field. However Guerrero, who in a book published in 1993 accurately predicted Mexico's financial crash in late 1994, warned that Mexico is about to start running annual budget deficits.

    The nation also is in the midst of a credit boom that will reach 39.6 percent of gross domestic product by 2012.

    ``This will create a bubble similar to the one that has just burst in the U.S.,'' he said.

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