The U.S. plastics industry swung from a trade surplus to a deficit in 2020, according to a new report, as the economic dislocations from the coronavirus pandemic caused exports to plunge.
The U.S. plastics industry had a trade deficit of $5.5 billion in 2020, a sharp reversal from surpluses of $727 million in 2019 and about $3 billion in 2017.
Plastics-related exports dropped 8 percent but healthier domestic demand meant imports rose about 2 percent, according to the Plastics Industry Association's Global Trends report, which was released Oct. 13.
The report said total exports to the plastics sector's two largest trading partners — Mexico and Canada — dropped from $27.7 billion in 2019 to $25.4 billion last year.
Perc Pineda, the association's chief economist, said the industry has seen improvements in 2021, with trade volumes up 27.9 percent in the first half of the year compared to the same period in 2020. But there are still significant unknowns about the global economy.
"Although the merchandise trade outlook is much brighter this year, uncertainties remain and depend largely on global economic recovery," he said.
The Washington-based association released the report at the Fakuma plastics and rubber trade show, held Oct. 12-16 in Friedrichshafen, Germany.
Some previous trends maintained themselves, even if they accelerated somewhat in the pandemic.
For example, the trade surplus with Mexico, historically the industry's largest, shrank, while its long-term deficit with China got bigger, both to the detriment of the industry.
The surplus with Mexico fell from $9.8 billion in 2019 to $8.2 billion last year, while the deficit with China rose from $13.7 billion in 2019 to $15.3 billion in 2020.
China is the world's largest buyer of plastic resin and a large importer of U.S. materials.
Historically, the U.S. plastic resin sector has maintained large trade surpluses, while the other three main segments of the industry — processing, machinery and mold making — have had deficits or decidedly mixed trade pictures.
The resin sector had an overall $18.6 billion trade surplus in 2020, including a $3 billion surplus in the resin trade balance with China. That is up from a $2.5 billion resin surplus with China in 2019.
The larger surplus in resin sales in China masked deficits in other sectors, giving the U.S. plastics industry an overall $15.3 billion deficit with China, the report said.
China is the third-largest export market for the U.S. plastics sector, behind Mexico and Canada, which are also the top sources of U.S. plastics imports.
The U.S. plastics sector exported $13.7 billion worth of products to Mexico and $11.7 billion to Canada.
While the U.S. plastics industry's trade position with Mexico has worsened in recent years — the sector had an $11.1 billion surplus with Mexico in 2018 but that's dropped steadily — the association said it believed the rewrite of the North America Free Trade Agreement will pay dividends.
As global supply chains become more stressed, it predicted the new regional trade deal will help the plastics sector.
"The updated free trade pact, United States Mexico Canada Agreement, should further enhance trade among the three countries, which is important particularly as global manufacturing is experiencing supply chain difficulties," the association said.