A generally bullish outlook for plastics

Veteran economist Alan Tonelson is one of those brave souls that track the manufacturing market, including plastics. He"s the founder of the RealityChek blog, which focuses on manufacturing, the broader economy and trade.

Tonelson, whose experience includes almost 20 years as a researcher with the U.S. Business and Industry Council, recently took some time via email to share his outlook for the plastics market.

Q: Do you expect strong demand in plastic products or in manufacturing in general? What type of impact could inflation or higher interest rates have on plastics markets?

Tonelson: Interestingly, taking out inflation, the latest Federal Reserve figures show that plastics products production has grown faster than overall manufacturing production since the middle of last year. Given public concern about plastics pollution and the Biden administration"s receptivity to moving away from such allegedly "unsustainable" goods, that performance is especially impressive.

And since I"m bullish generally about manufacturing for the coming year (mainly because of the likely reopening of the domestic and foreign economies, because I can"t see the Fed tightening enough to slow inflation or growth significantly, and because manufacturers generally have navigated the pandemic so well), the outlook for plastics seems promising, too.

Inflation looms as the biggest potential problem for plastics, especially in oil/feedstocks. But because I don"t see much Fed tightening, I suspect producers will be able to continue to pass on prices.

Q: What about plastic resins? Impact of oil prices? Impact on exports or imports?

Tonelson: Resins output has actually been weakening lately, which seems inconsistent with the performance of plastics products. It"s also especially puzzling since the very big plastics materials and resins trade surplus has held up well throughout the entire pandemic period, and the plastics products trade balances (including huge deficits in miscellaneous plastics products) have all worsened substantially.

Q: Many plastics firms have been struggling to find enough workers, even before COVID. Do you see the labor market improving?

Tonelson: I do see labor market improvement, as wages keep going up, and more workers come off the sidelines because of the end of various pandemic aid programs. At the same time, labor shortages can be blessings in disguises if (as typical in the past), they spur companies to boost productivity by adding more labor saving machinery and tech to their operations.

source : https://www.plasticsnews.com/blog/generally-bullish-outlook-plastics

edit : plastic handler http://www.ihandler.co.kr