Global resin markets are improving but still face a good number of challenges.
These topics were in focus during a recent webinar hosted by M. Holland Co., a major resin distributor based in Northbrook, Ill.
"We're in a unique situation because there aren't many fiscal levers to pull to affect the economy," Executive Vice President Dwight Morgan said during the webinar. "Part of the problem was that the economy wasn't totally recovered from the Great Recession [of 2007-08] when the pandemic hit."
Money supply has created demand, he added, with U.S. core inflation for September up 8.2 percent from the prior year.
"Inflation is becoming wildfire," Morgan said.
The U.S. Federal Reserve has raised interest rates to try to fight inflation. Rates began the year at 0-0.25 percent but by September had been increased to 3-3.25 percent. Morgan said the Fed could raise rates to 4.5 percent before easing.
On the retail and wholesale side, Morgan said high inventories had created a gap of almost 20 percent between inventory growth and sales. Many firms had overbuilt their inventories because of recent supply constraints, he added.
One positive for the U.S. economy has been reshoring of manufacturing work being done to protect supply chains. Morgan said reshoring has brought 350,000 jobs back to the United States.
Morgan also cited data from consulting firm AMI showing that North American resin demand is expected to grow almost 2 percent per year between 2021 and 2025. During that time, on an annual basis, Chinese resin demand is set to grow more than 3 percent, with Asian resin demand (outside of China and India) growing almost 2 percent, while European resin demand is expected to decline just over 1 percent.
Within North America from 2022-25, total polyethylene demand is set to grow 7 percent, with demand for polypropylene and PVC each up almost 10 percent and PET demand up almost 2 percent.