So far in 2016, North American resin distribution sounds like a tale of two markets.
Sales totals would indicate that third-party sales of polyethylene and polypropylene — the region's most widely-used commodity resins — are growing only slightly, but executives at some firms are seeing more positive results.
“We just finished 10 months of our fiscal year, and we've already sold more than we did in fiscal 2015,” said Ed Holland, president and CEO of M. Holland Co. in Northbrook, Ill. “And that doesn't even include Latin America and Puerto Rico. Our organic growth has been double-digit and broad-based.
“Some of the moves we've made in the last three to five years are paying off,” he added. “We've brought in new people and new product lines.”
Similar optimism is in the air at Osterman & Co. in Cheshire, Conn. “2015 was our best year ever, and we're ahead of that pace by a little more than 10 percent,” said David Dever, distribution sales vice president. “We're up almost 30 percent in engineering thermoplastics, 5 percent in polyethylene and 7 to 8 percent in polypropylene. We're selling a lot of polypropylene into consumer products and caps and closures.”
Mike Pignataro is seeing a similar picture at Bamberger Polymers. “We're really happy to report the 2015 was a record year — our first billion-pound year — and that we're on track to surpass that this year, with sales up 12 to 15 percent,” he said.
“Our core continues to be polyethylene and polypropylene, and HDPE is showing good growth,” added Pignataro, who is vice president of North American sales at Jericho, N.Y.-based Bamberger. “Consumer and industrial packaging, automotive and medical are still good markets.”
PolyOne Corp. “is seeing an uptick in polyethylene and polypropylene across the board, on average,” according to Mark Crist, vice president of distribution for the Avon Lake, Ohio-based firm. “Contrary to popular belief, we're seeing a healthy economy and our customers seem to share that vision.
“Certain segments, like oil and gas exploration, are down,” added Crist, whose unit posted first-half financial growth of almost 2 percent, due in part to lower selling prices for many resins. “But overall, we see confidence levels commensurate with GDP growth levels.”
More subdued responses, however, are heard from other distribution execs.
“The market is flat but steady,” said Shawn Williams, senior vice president of plastics at Nexeo Solutions in The Woodlands, Texas. “We're not seeing significant growth, maybe slightly above GDP overall.”
Comparisons to GDP growth, of course, aren't that great in a year when that growth rate is just over 1 percent, as it's been in the U.S. in recent quarters. “Health care and automotive are doing well for us, and Mexico is coming along quite nicely — it's been a pocket of strength,” Williams added.
“Overall, there's a higher level of uncertainty now vs. the first quarter,” said Kevin Chase, president of Chase Plastics in Clarkston, Mich. “Maybe that's because of the election and the economy. Some people are putting dollar bills in their mattresses.
“The market is just OK,” Chase continued. “We're not getting any tailwind from the macro economy, which is growing at only 1 percent. Some larger market sectors like automotive and consumer and industrial packaging could do better in the second half if we see some progress.
“But we're also seeing lower business investment. We can sense vibrations in some market segments, but they're not shaking like they were.”
This disconnect also was noted by John Moisson, president of Jamplast Inc. in Ellisville, Mo. “There continues to be a migration of producer-direct sales to distribution,” he said. “So distribution should be stronger than the market in general, but for us, year-to-date has been flat.
“Part of that is that prices are down for engineering resins and other materials,” he added. “Our unit volume [in pounds] is up single digits, but it's like a gas station that sells 1,000 gallons per month. Your sales in dollars could be down even with similar numbers.”
First-half sales totals compiled by the American Chemistry Council showed that U.S./Canadian sales of HDPE to distributors were up more than 3 percent, while sales of PP — including Mexico — were up more than 1 percent. But distributors bought 3 percent less LLDPE and more than 15 percent less LDPE in that six-month period.
First-half sales of those materials to resellers were more positive. Resellers bought more than 5 percent more LLDPE, more than 6 percent more LDPE and almost 13 percent more PP during that period, according to ACC. LDPE — down more than 2 percent — was the only major commodity where sales to resellers declined in the first half.
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