U.S. production of plastic resins is expected to decline almost 6 percent in 2020 as a result of the COVID-19 pandemic but then bounce back by more than 13 percent in 2021, according to the American Chemistry Council.
The 5.6 percent decline projected for plastic resins in 2020 is the lowest of five major chemical segments tracked by Washington-based ACC in an economic update released June 25. The 13.1 percent growth rate for 2021 is similar to those projected for other segments.
"A pandemic wasn't on anyone's radar screen when the year started," Martha Moore, ACC senior director of policy analysis and economics, said on a June 24 conference call. "COVID-19 completely changed everything.
"The collapse in economic activity is the worst we've seen since the 1930s," she added. "Global trade was already hampered because of the U.S.-China conflict, but we're now looking at a global contraction."
ACC Chief Economist Kevin Swift called resin "a bright area" in the forecast. He cited polyethylene use in packaging and polypropylene use in fibers for medical products during the pandemic as applications that should prevent the 2020 resin production loss from being worse.
Swift added that the U.S. advantage in natural gas-based production of plastics and petrochemicals should be retained, since oil prices have recovered after major drops earlier this year.
Swift also said that he's been impressed with the response of the U.S. chemicals industry to the pandemic.
"It goes beyond keeping polypropylene resin running to production of fabrics and gowns and masks for medical supplies and converting production to make hand sanitizer," he added.
ACC officials provided updates and data on several topics related to the pandemic, including:
• Predicting global gross domestic product to decline by 4.6 percent in 2020 before growing 5.3 percent in 2021. U.S. GDP is expected to fall 6 percent in 2020 and increase by 4.1 percent in 2021.
• U.S. consumer spending should drop 6.4 percent in 2020 and grow by 4.6 percent in 2021. Business investment is projected to decline 9.9 percent in 2020 and expand by 2.7 percent in 2021. The U.S. unemployment rate is expected to improve but will remain above 5 percent until 2023.
• U.S. vehicle sales will drop from 16.9 million in 2019 to 13.1 million this year. That number should rise to 14.9 million in 2021. Housing starts are expected to decline from 1.25 million to 1.19 million in 2020, recovering to 1.24 million in 2021.
• Among 18 U.S. end-use industries tracked by ACC, motor vehicles and parts is expected to have the steepest decline in 2020, with demand plummeting almost 27 percent. The next lowest decline is in apparel, where demand should be down more than 21 percent. Demand for food, beverages and tobacco will see the smallest decline, with demand down less than 1 percent. Semiconductors and electric components will see the next lowest demand drop, down less than 3 percent.
• Chemical industry employment, including resins, is expected to decline by 20,000 jobs in 2020, falling to 524,000. Those levels should recover in 2021 and 2022 but aren't expected to reach pre-pandemic levels until 2024.
• Capital spending in the U.S. chemicals industry is expected to decline almost 18 percent in 2020 to just under $29 billion.