The value of first quarter shipments of North American injection molding and extrusion equipment dropped 6.9 percent to $254 million compared to the same period a year ago.
The preliminary estimate, which comes from the Plastics Industry Association's committee on equipment statistics, fell 19.6 percent compared to the fourth quarter of 2019.
"The first quarter shipments were expected to come in lower due to the coronavirus shutdowns in March," Perc Pineda, the association's chief economist, said in a news release. "Nevertheless, we saw robust growth in single-screw and twin-screw shipments on a year-over-year basis."
Shipments of single-screw extruders increased 15.5 percent while shipments of twin-screw extruders declined marginally by 0.8 percent. The value of both categories rose significantly, with single-screw extruders up 34.9 percent and twin-screw extruders up 19.3 percent.
Pineda touched on some of the reasons why parts of the plastics machinery industry are faring better than other in the May 20 Plastics News Live webinar. He talked about how some extruders could be modernizing their machine fleets or adding capacity for products like personal protective equipment.
"In terms of growth, it's probably machines that would actually enhance production capacities of the processors, because if you think about it, production of plastics hasn't really stopped," Pineda said. "Those who would optimize production, so you're talking auxiliary equipment for example and those that offer solutions to plastics processing, would remain healthy for this year, I'd imagine."
Meanwhile, the value of injection molding equipment shipments fell 23.6 percent from the previous quarter and 11.8 percent from a year ago. The largest end market for these machines is automotive, which is forecast to decrease to 69.6 million units this year. That's a 22 percent drop compared to 2019.
Pineda said businesses are being very cautious about capital investments despite low interest rates.
"It's really the weak aggregate demand in the economy that's causing a lot of businesses to stay on the sidelines" and postpone investment, he said.
"My sense is as they see these things change beginning in the third and onto the fourth quarter, then you will see more action in terms of new orders and quoting activity in the plastics machinery space," Pineda added.
The equipment statistics committee surveys plastics machinery suppliers every quarter about present market conditions and future expectations. For the coming quarter, 18.5 percent of the respondents expect conditions to either improve or hold steady. That represents a big drop from the fourth quarter of 2019, when 69.4 percent of respondents expected conditions to improve or hold steady.
For the next 12 months, 22.6 percent expect market conditions to be steady to better. That's down from 73.5 percent in the previous quarter's survey.
"The coronavirus pandemic continues to disrupt the manufacturing and service sectors of the economy, both impacted by the plastics industry. However, the demand for plastics remains fundamentally healthy, particularly in the medical and consumer essentials spaces, and the economic slowdown is transitory," Pineda said.
The committee said plastics machinery exports increased 1.6 percent in the first quarter to $358.5 million compared to the previous quarter. Imports were basically flat; up 0.5 percent to $746.3 million. The resulting trade deficit of $387.8 million is flat as well, down 0.6 percent from the previous quarter.
Mexico and Canada continue to be the first and second largest plastics machinery export markets for the United States. Combined exports to the United States, Mexico and Canada Agreement trade partners totaled $153.4 million, or 42.8 percent of total U.S. plastics machinery exports.