15
T h e Plastic Industry: E c o n o m i c s a n d E n d - U s e Markets R. A. McCARTHY Springborn Laboratories, Inc., Enfield,CT06082
Sales History Styrenics Polyethylene Polypropylene Poly(vinyl chloride) Engineering Plastics Thermosets Other Resins Summary The plastic industry of the 1980s is in a different situation than it was in 1973. At that time, annual plastic consumption had been growing at between 11 and 15% for the previous 50 years. Prices for polymers were rapidly escalating because of the recent removal of price controls, and, although some markets were being lost because of the higher prices, expansions in capacity amounting to 30% of the total were being planned. There was no doubt that the steady upward trend in the growth would continue because plastics were expected to maintain their relative competitiveness with other materials. The Arab o i l embargo of 1973 brought an end to this optimism. However, the short-term impact of the embargo, which further drove prices up because of increasing raw material feedstock costs, was softened because it came in the face of a strong worldwide economy that accepted increased prices and passed them on to the consumer. Plastic production continued to expand from new and modernized facilities using new technologies. The peak of polymer production of 40.6 b i l l i o n 1b was reached in 1979. The early 1980s saw increasing costs of capital worldwide, and inflation further pushed increasing feedstock and energy prices higher. The economy, worldwide, slowed and there began to appear declining forecasts for future plastic growth. Polymer consumption dropped as the major markets based on the housing and automotive industries declined. 0097 6156/ 85/0285-O323S06.00/0 © 1985 American Chemical Society
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The r e c e s s i o n a r y economy, l o w e r i n g p r i c e , and overcapacity caused the polymer producers to reassess t h e i r commitments and restructure t h e i r a c t i v i t i e s for a slower growth period. I t was not u n t i l 1983 that the 1979 s a l e s l e v e l was again reached. Sales History T a b l e I r e v i e w s the i n d u s t r y performance i n 1981. The v a l u e of shipments, after the a l l - t i m e high i n 1979, slumped badly i n mid1980. Early 1981 s a l e s rose again to an a l l - t i m e high for monthly s a l e s ; but a steady d e c l i n e occurred after March and continued into e a r l y 1982, after which there was s t a b i l i z a t i o n at reduced volumes and reduced s e l l i n g prices. Recovery began i n mid-1982 followed by a 15% increase i n s a l e s i n 1983 and a 6.5% increase i n 1984. Table I I provides information on the i n d i v i d u a l p l a s t i c s that made up 1981 s a l e s , insofar as data are a v a i l a b l e . Where there are fewer than three s u p p l i e r s , no i n f o r m a t i o n i s p r o v i d e d to the p l a s t i c trade association [Society of the P l a s t i c s Industry (SPI)] f o r c o m p i l i n g . The poor 1979-1983 s a l e s r e c o r d i s e v i d e n t . These p l a s t i c s were used i n industry as shown i n Table I I I . The 1982 r e s i n s a l e s t o t a l was 34,455 m i l l i o n l b , which i s a drop of 6.5% from 1981, c a l c u l a t e d by using equivalent compilation, and a 12.7% drop from 1979. The recovery brought strong growth and i n 1984 r e s i n s s a l e s were 43,400 m i l l i o n l b s . However, the 19821983 slump r e s u l t e d i n important changes i n the i n d u s t r y . The box l i s t s the 50 major p l a s t i c producers at the beginning of 1983 and s i g n i f i c a n t changes that occurred i n industry structure. FIFTY LEADING PLASTIC PRODUCERS IN EARLY 1983 A i r Products Allied American Cyanamid American Hoechst Amoco Arco Chemical BASF-Wyandotte Borden Borg-Warner Celanese CertainTeed Chemplex
Ciba Geigy Cosden Diamond Shamrock Dow Chemical DuPont/Conoco Eastman Chemical E l Paso Ethyl Exxon Formosa P l a s t i c s General E l e c t r i c General T i r e
Georgia P a c i f i c Goodrich Goodyear Gulf Hammond Hercules ICI Mo bay Mobil Chemical Monsanto Northern Petro. Occidental Phillips
Polysar Reichhold Rohm & Haas Shell Shintech Soltex Tenneco Texstyrene USI USS Chemical Union Carbide Uniroyal Upjohn
Arco Chemical dropped out of both high and low density polyethylene (as C i t i e s S e r v i c e d i d i n 1982). T h e i r h i g h d e n s i t y p l a n t went to USI. Chemplex polyethylene went to Northern Petrochemical. Diamond Shamrock i s e s s e n t i a l l y out of PVC f o l l o w i n g Firestone and Stauffer and Du Pont/Conoco. E l Paso shut down an LDPE p l a n t . propylene plant to Amoco.
G u l f i s reported s e l l i n g the
4803 425 $27.3 $32.8 $ 1.7
Fabricated Prod. (SIC 3079)
Survey of I n d u s t r i a l Purchasing Power, U . S . Dept. of Commerce 1983 I n d u s t r i a l Outlook, U . S . Dept. of Commerce
487 90.5 $16.4 $19.6 $ 2.6
Number of establishments (over 20 emp.) Number of employees Value of shipments (industry data) b i l l i o n Value of shipments (product data) b i l l i o n Value of exports, b i l l i o n
Sources:
P l a s t i c Materials & Resins (SIC 3821)
The Industry i n 1981 i n Current D o l l a r s
Parameter
Table I .
19 14 21
Polystyrene P o l y v i n y l Chloride Other c
3567 6066 3221
i n j . mold. blow mold. blown film i n j . mold. i n j . mold./ fibers i n j . mold. extrusion coatings
elec/electronics packaging packaging transporation pkg./home furnishings packaging bldg. & construct. home furnishings
bldg. & construct. bldg. & construct. furniture elec./electronics
3.6 -2.1 -0.9 NA
2.4 -2.4 0.7 1.7
-1.8 -3.4 -0.3 -2.2
0.0 NA
1977-1983% Annual Growth
elec/electronics bldg. & construct.
Major Industry
c
flsocyanate & polyol producers ^Includes p o l y a c e t a l , polycarbonate, polyphenylene s u l f i d e , thermoplastic polyester, polysulfone, modified polyphenylene oxide, polyimide, polyamide-imide and fluoropolymers Includes a c r y l i c s (532 MM l b s . ) , c e l l u l o s i c s (114 MM l b s . ) , PVC copolymers (178 MM l b s . ) , Paint resins (699 MM l b s . ) , misc. thermosets including alkyds (350 MM l b s . ) , and 430 MM lbs of other resins Source: Synthetic Organic Chemicals, U . S . International Trade Commission, SPI 1984 E d i t i o n Facts & Figures of U . S . P l a s t i c Industry Modern P l a s t i c s
5700 8400 NA
NA 6690 10400 430 5580
16 10 10 11 12
1485 5691 8041 321 4434
1084 1352 1808 831
NA NA NA 1415
FRP adhesives foams i n j . mold.
coating adhesives
334 2484
NA NA
7 32 a 21 25 20 3
Epoxy Phenolic Unsaturated Polyester Melamine & Urea Polyurethane ABS & SAN Engineering b Thermoplastics HDPE LDPE & LLDPE Nylon Polypropylene
Estimated Capacity
Major Process
Polymer Family
Major Producers
The P l a s t i c Industry i n 1983 - Sales by Resin i n M i l l i o n Pounds 1983 Sales
Table I I .
393 2572
391 2387
3753 517
Consumer & i n s t i t u t i o n a l
35186
3432 38717
Exports
36956
3425
3259
3670
1670
35109
3909
3232
2584
241
3269
1556
2275
7514
10497
1392
1982
40502
4150
3636
1800
318
3816
2007
2514
8552
11813
1896
1983
1.1
4.9
1.3
-10.5
-11.5
0.4
1.5
4.7
3.1
3.4
-0.5
%/yr Change 1979-1983
Note: A l l values are i n m i l l i o n pounds, on a dry weight b a s i s , and include sales to r e s e l l e r s and compounders. Source: SPI Committee on Resin S t a t i s t i c s
Total
3670
3443
A l l others 3054
2794
1646
Adhesives, i n k s , & coatings
Industrial/machinery
3553
1894
2670
Furniture/home furnishings
2453
3043
7259
Electric/electronic
6424
10465
7573
10003
1573
1981
Building & construction
10334
1605
1934
Transportation
Packaging
1980
1979
Major Market for P l a s t i c s 1977-1981
Major Market
Table I I I .
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APPLIED POLYMER SCIENCE
• E t h y l s o l d i t s PVC o p e r a t i o n s to G e o r g i a P a c i f i c who spun o f f a l l PVC t o G e o r g i a - G u l f . G r e a t A m e r i c a n , R i c o and G e n e r a l Tire/Pantasote shut down PVC operations. • General E l e c t r i c dropped out of phenolics as did Monsanto. • Hammond sold i t s polystyrene p l a n t . • Mobay dropped ABS as did Mobil Chemical and USS Chemical. • S h e l l dropped polystyrene as did USS Chemical. Downstream o p e r a t i o n s were s o l d by American Hoechst, A r c o , DuPont, Mobay, Northern P e t r o c h e m i c a l , P h i l l i p s , R e i c h h o l d and Tenneco. On the p o s i t i v e side, Himont, Formosa P l a s t i c s , and Texstyrene are new s u p p l i e r s and some of the shutdown p l a n t s have been purchased. M o b i l Chemical and Eastman i n t e n d to expand i n polyethylene and new downstream p l a s t i c a c q u i s i t i o n s have been made by Ashland, E l Paso, Goodyear and Hercules. S i n c e 1983, t h e r e has been c a u t i o u s optimism t h a t an economic recovery i s at hand (1). Real economic growth i n the second quarter was at 9.2% which f o l l o w e d a 2.5% growth i n the f i r s t q u a r t e r . The year could achieve a 6% growth o v e r a l l with i n f l a t i o n under c o n t r o l , the employment s i t u a t i o n i m p r o v i n g , housing s t a r t s up 50%, and domestic auto p r o d u c t i o n 30% ahead of 1982. R e a l gross n a t i o n a l product (GNP) growth i s expected to average over 4%/year through 1987, and i n f l a t i o n rates should average about 5%/year. World o i l p r i c e s s h o u l d be s t a b l e through 1984 and then r i s e at 0.5%/year through 1987. I n t e r e s t r a t e s w i l l remain h i g h , and European recovery w i l l l a g behind the United States, but housing s t a r t s and domestic car production should remain strong. These a r e good signs f o r t h e p l a s t i c i n d u s t r y i n i t s r e s t r u c t u r e d mode, and they have i n f l u e n c e d the f u t u r e growth forecasts for the i n d i v i d u a l p l a s t i c s : Styrenics (2) P o l y s t y r e n e and a e r y l o n i t r i l e - b u t a d i e n e - s t y r e n e (ABS) are mature products, and growth i n the 1980s w i l l not be as dramatic as i n the two p r e v i o u s decades. S o l i d p o l y s t y r e n e was down i n s a l e s 30% i n 1984 from the 1979 h i g h p o i n t . Expandable p o l y s t y r e n e (EPS) h e l d steady at 420—440 m i l l i o n l b over the e a r l y 1980s. Predictions for future growth are for a 6% growth i n 1985 and 4—5%/year thereafter. EPS s h o u l d have growth i n the 8-9%/year range. A t o t a l f o r a l l polystyrene of 4.1 b i l l i o n l b i s seen for 1988. New capacity from Mobil i n 1984 w i l l ensure capacity for some time because u t i l i z a t i o n i n the recent past has been running from 76 to 80%. Some f u r t h e r shakeout i s s t i l l expected among the 11 l a r g e s t s u p p l i e r s . Packaging and goods s e r v i c e items w i l l continue to be the l a r g e s t markets. ABS rebounded i n 1983 and 1985, increasing i n s a l e s by 65% from 1982 l e v e l s . Growth w i l l be i n the 5%/year range o v e r the next 5 years but w i l l not reach 1979 l e v e l s u n t i l 1987-88. U t i l i z a t i o n of c a p a c i t y i s now back to 88%, s i n c e the s u p p l i e r s have d w i n d l e d to
15.
MCCARTHY
The Plastic Industry: Economics and End-Use Markets
t h r e e . The automotive and pipe i n d u s t r i e s w i l l never a g a i n be s t r o n g ABS markets, but ABS and a l l o y s of ABS s h o u l d compete w i t h engineering p l a s t i c s . Polyethylene (3) Polyethylene i s a l s o a mature market. In 1982 10,890 m i l l i o n l b of domestic consumption and 1821 m i l l i o n l b of export consumption were o b s e r v e d . Volume growth for the p o l y e t h y l e n e s has been p o s i t i v e except i n 1975 and 1980. A 4.3%/year growth i s estimated from 198292 f o r domestic use, but a slumping export market s h o u l d reduce o v e r a l l growth to 3.1%/year. There are now 17 producers, many of whom have l i n e a r low-density polyethylene (LLDPE). This new type of polyethylene should be a factor i n sustaining growth. Union Carbide and Dow plan expansions that w i l l be needed to meet the 16.6 b i l l i o n l b of consumption expected by 1992. Packaging w i l l be the most important market, and i t i s expected t h a t these r e s i n s w i l l g a i n market share at the expense of paper, s t e e l , and g l a s s . Polypropylene (4) This product had overcapacity problems p r i o r to the 1980s despite a 14.3%/year growth i n s a l e s volume from 1975 to 1980. There were strong markets i n blow molding, f i b e r s , f i l m , sheet, and export, a l l growing i n the 1970s at over 15%/year. O v e r a l l growth dropped to 3.9%/year i n 1982 as most growth of p o l y p r o p y l e n e ' s markets flattened. However, p r e d i c t i o n s are f o r 6.2%/year growth f o r polypropylene i n 1981-90, which w i l l mean a 92% plant u t i l i z a t i o n by 1985. There are 12 s u p p l i e r s , and they have been concentrating on t e c h n i c a l innovations. F i l m , sheet, and blow molding should remain strong markets, and f i l l e d products should secure new a p p l i c a t i o n s . New products and new processes f o r p o l y m e r i z a t i o n s h o u l d make polypropylene a better product i n the 1980s. P o l y ( v i n y l c h l o r i d e ) (5) In 1979, the i n d u s t r y shipped 6.2 b i l l i o n l b of r e s i n and u t i l i z a t i o n was 90%. T h i s amount dropped to 5.4 b i l l i o n l b i n 1980 and 1982, but 1983 saw a r e t u r n to 1979 l e v e l s . C o n s t r u c t i o n i s the moving force i n p o l y ( v i n y l c h l o r i d e ) (PVC) s a l e s and accounts for 54% of the t o t a l , and when i t i s strong, PVC s a l e s are strong. The PVC industry o v e r b u i l t capacity. Since 1979, 2 b i l l i o n l b of large reactor capacity were i n s t a l l e d . U t i l i z a t i o n dropped to 71% i n 1982 but should be back up to 88% i n 1985 when PVC demand i s estimated to reach 6.85 b i l l i o n l b . T h i s i s a 4-5%/year growth. However, PVC producers see problems ahead from imports from Mexico and Canada of f i n i s h e d p r o d u c t s , and a t t a c k s by c o m p e t i t i t o r s and a c t i v i s t s who seem to have t a r g e t e d on PVC as a f i r e hazard. Research and development has s u f f e r e d d u r i n g the years of low p r o f i t a b i l i t y . There i s much foreign ownership i n PVC capacity (20%), and end uses such as p i p e , r i g i d c a l e n d e r i n g , and w i r e and c a b l e have become h e a v i l y foreign c o n t r o l l e d . The 14 PVC s u p p l i e r s w i l l face changes as s e v e r a l more plants are expected to change hands.
329
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APPLIED POLYMER SCIENCE
Engineering P l a s t i c s These m a t e r i a l s ( p o l y a c e t a l s , p o l y c a r b o n a t e s , thermoplastic polyesters, fluoroplastics, p o l y a r y l esters, thermoplastic polyimides, polyphenylene s u l f i d e s , polysulfones but excluding ABS and nylon) were looked on, i n the 1970s, as the market segment with high growth r a t e s , h i g h margins, e x c l u s i v e proprietary p o s i t i o n s , and good patent protection. Many commodity p l a s t i c producers became interested i n developing such products to counteract the effects of slowing growth i n t h e i r more c o n v e n t i o n a l products. These r e s i n s did grow at a r a t e of about 11%/year, but t h i s r a t e slowed to 4.7%/year i n the l a s t 5 years of the p e r i o d . Volume was o n l y 775 m i l l i o n l b i n 1982, down 7% from 1981. In a d d i t i o n , the area became crowded w i t h new s u p p l i e r s , f o r e i g n and domestic, and a l l o y s of e x i s t i n g engineering p l a s t i c s are p r o l i f e r a t i n g . The engineering thermoplastics should reach 2,000 m i l l i o n l b i n s a l e s by 1988 and w i l l p r o v i d e an important part of the economic growth of the p l a s t i c industry because they are able to compete with metals better than the commodity p l a s t i c s . Growth and p r o f i t a b i l i t y for e n g i n e e r i n g p l a s t i c s w i l l c o n t i n u e to be above t h a t of the commodity p l a s t i c s despite increasing entries. Thermosets (6) The major t h e r m o s e t t i n g r e s i n w i t h the e x c e p t i o n s of epoxies and ureas, a l r e a d y showed s i g n s of m a t u r i t y before the 1980s. The growth r a t e from 1972 to 1980 f o r these t h e r m o s e t t i n g r e s i n s was about 2%/year (7). Like PVC, these r e s i n sales are c l o s e l y r e l a t e d to the b u i l d i n g and construction industry for bonding and adhesives. The i m p r o v i n g housing market s h o u l d b r i n g t h i s segment back to a 4%/year growth r a t e i n 1982-88, which would mean 5.9 b i l l i o n l b consumption i n 1988. Other Resins (6) The polyurethanes, a l s o l i k e PVC, have had t h e i r share of problems with f i r e - r e l a t e d controversies and have suffered a 2%/year l o s s i n s a l e s over the past 5 y e a r s . The markets for f l e x i b l e foam are c l o s e to saturation, but reaction i n j e c t i o n molding (RIM) and r i g i d foam should have better growth rates. F l e x i b l e foam usage to 1988 should show a 5%/year growth, one-third of which w i l l be due to RIM automotive usage. Growth i n r i g i d foams should be i n the 4.7%/year range. This would mean a t o t a l volume of 2,155 m i l l i o n l b i n 1988. There are many other r e s i n s , not s p e c i f i c a l l y mentioned above, whose volume w i l l remain roughly constant, or growing at 1%/year, over the 1982-86 period. Domestic growth w i l l probably increase at a r a t e of 6-1/2%/year, but imports are expected to drop 12%/year which w i l l r e s u l t i n l i t t l e or no growth. Summary These figures are summarized i n Table IV which gives an estimate for p l a s t i c r e s i n usage from 1982 to 1988. This represents a 6.2%/year growth, but 1982 was a depressed s a l e s year. Growth would be 4%/year i f estimated from 1981. This rate i s i n l i n e with expected
15.
MCCARTHY
Table I V .
The Plastic Industry: Economics and End-Use Markets
1982-1988 Estimated Growth i n Consumption of P l a s t i c Resins 1982
1988
26,837
39,145
Thermosetting resins
4,670
5,900
Engineering thermoplastics (ETP)
1,185
2,000
Polyurethanes
1,483
2,155
280
300
34,455
49,500
Market Segment Thermoplastic resins (ETP)
Other resins Total Note: A l l values are i n m i l l i o n pounds. Source: Modern P l a s t i c s , SLI estimates
331
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APPLIED POLYMER SCIENCE
growth in such market segments as transportation, building and construction, electrical/electronics, housewares, and toys. Only business machine housings are expected to see above average growth. Packaging and furniture growth are expected to be below average, and exports are expected to drop significantly. Given the modest growth predicted to 1988, approximately 4.3%, the market value of plastic resins should increase from $18.1 billion (8) to $36.4 billion by 1988 in current 1982 dollars on the basis of a 10% increase in prices in 1983 (9) and an 8.5%/year increase per year thereafter (assuming 5%/year inflation). This is a real growth of 12.5%/year, and, compared to a real GNP growth of 3.5%/year, the plastic industry market value of plastic resins should grow at a 3.6 ratio to the GNP. This ratio compares to a negative ratio in the 1977-82 period and a 4.7 ratio for the 1972-77 period. In summary, the growth of plastics w i l l be slower than the 12.1%/year during 1960-70 and 7.1%/year for 1970-80 (8). Low-priced feedstocks and new fast production techniques w i l l no longer be growth factors. Technical advances will be the major growth factor, and new technical developments in specialty plastics will be needed to maintain export markets. There will be more competitition from abroad in commodity plastics, and the demands of a more sophisticated fabrication industry w i l l be great. The resin suppliers who successfully weather the 1980s w i l l have to be innovative and efficient to a degree not previously required. Literature Cited 1. 2. 3. 4. 5. 6. 7. 8. 9.
Loos, K. D. "Economic Recovery: Oasis or Illusion," Ninth Plastic Planning Conference, New York, 1983. Peppin, A. "The U.S. Styrenics Business," Ninth Plastic Planning Conference, New York, 1983. Pastor, A. J. "Polyethylene," Ninth Plastic Planning Conference, New York, 1983. D r i s c o l l , J . J . "Polypropylene: A Light in the Sea of Darkness," Chemical Marketing Research Association: New York, 1982. Disch, G. E. "PVC: What's New For Whom?," Ninth Plastic Planning Conference, New York, 1983. Chem. Eng. News 1983, 33. Predicasts, Inc., Cleveland, OH U. S. Industrial Outlook 1983, U. S. Department of Commerce Loos, K. D. Ibid.
