Plastics consumption 'surpassed' expectations in 2022, new report says

Mexico City — Significant growth in the U.S. plastics industry trade volume compared with overall global trade volume took place in 2022 and the chief economist for the Plastics Industry Association says the trend is continuing this year.

"What stood out in the '22 data is really growth. The plastics industry has surpassed whatever the projections were for total merchandise trade and that's reflected in the report. So that's good. It also confirms why the apparent consumption of plastics in the U.S. has actually increased by double digits," said Perc Pineda, chief economist for the Washington-based trade group, which published new data Nov. 8.

"Of course, you could say you factor in inflation somewhere in there and you would still see a number that is higher than previous years. A lot of it has to do with the rebound that has been going on post COVID-19 pandemic. That's really what it is," he said.

Pineda made a trip to Mexico City to unveil the association's annual Global Trends report at the Plastimagen trade show and help highlight the importance and interdependency of the plastics industries in Mexico and the United States.

Economists are all about the numbers, and Pineda came to Mexico armed with plenty of industry indicators regarding the market trends for the U.S. plastics industry.

He pointed to one set of statistics to demonstrate the growth the industry had in 2022: Global trade volume increased by 2.7 percent in 2022 across the board according to the World Trade Organization, but the U.S. plastics industry trade volume increased what he called a "remarkable" 9.7 percent.

Those growth numbers are expected to slow in 2023 for both overall world trade and U.S. plastics trade volume, he said, adding he would not be surprised to see U.S. plastics again out pace world trends this year.

Pineda also said the U.S. plastics trade balance has returned to positive numbers after falling into a deficit during the height of COVID-19. The global economic decline and supply chain issues had forced the numbers into the red for the United States for a time.

Last year's improvements over 2021 can be directly connected to a post-COVID-19 rebound, Pineda said.

Last year saw a 13.7-percent increase in the value of consumption of all plastic industry goods, a wide-ranging category that includes resin production and machinery, for example, and not just finished goods, compared with 2021.

"Apparent consumption of plastics industry goods rose 13.7 percent, from $345.9 billion in 2021 to $393.3 billion in 2022. This included the effect of inflation and possibly some unintended inventory accumulation," an executive summary of the new report states.

The largest export market for the U.S. plastics industry in 2022 was Mexico, valued at $19.7 billion in 2022, the new report states. That included the largest trade surplus of $11 billion for the U.S. industry. Canada came in second in terms of export markets at $16.3 billion and China was third at $6.9 billion.

In second place for trade surplus for 2022 for the U.S. plastics industry was Belgium at $2.9 billion, while Brazil was third at $2.7 billion.

Total trade volume in resin and plastic products between the United States, Mexico and Canada totaled $258.8 billion in 2022.

The United States-Mexico-Canada Agreement, which promotes free trade between the three countries and succeeded the North American Free Trade Agreement, plays a big factor in the movement of goods across North American borders.

But Pineda also said the United States has a litany of other trade deals with countries in both Central and South America that hold the potential to help bolster free trade for the U.S. plastics industry, if those agreements are utilized more in the future.

"That really, for me, spells opportunity for not only the plastics industry but the manufacturing sector as a whole and the economy as a whole," he said.

One factor limiting free trade in these cases is higher labor rates in the United States compared to these other countries in Central and South America, Pineda said.

The report also indicates China, the United States and Germany continued to be the top three in terms of global plastics trade in 2022, in that order.

Exports for the U.S. plastics industry increased by 11.8 percent last year and imports rose by 7.2 percent, the new report states. The overall plastics trade deficit for the United States fell to $7.4 billion in 2022, compared with $10 billion in 2021, according to the report.

U.S.-made resins enjoyed a $23.1 billion trade surplus in 2022, up from $17.9 billion in 2021, according to the new report. Plastics machinery exports increased by 8.4 percent from 2021 to 2022 and mold exports increased by 9.3 percent year-over-year.

Looking forward, Pineda said the view is a bit murky due to geopolitical considerations as well as energy price fluctuations.

Plastic industry exports from the United States fell 6.3 percent during the first half of 2023, but imports were off even more at 19.3 percent. Despite both categories both being lower, this caused the industry's trade balance to recover from a $5.2 billion deficit in the first half of 2022 to a $1 billion surplus in the first half of 2023.

Pineda said he's hopeful that deficit will further decrease during the second half of the year to keep that number in the black for the full year.