Contraction Accelerates Slightly
Third dip in four months.
With a reading of 48.4, Gardner’s Plastics Processors Business Index contracted at a slightly faster rate in June than May—and for the third time in four months. June was the lowest level for the index since August 2013. Except for a brief spurt of accelerating growth from November 2014 to January 2015, the overall index has trended down (not necessarily contracted) at a fairly consistent rate since March 2014.
New orders increased somewhat in June. However, the overall trend here has been down since March 2014. Production expanded for 30th month in a row. However, the rate of increase has slowed dramatically since January. Generally, production has been stronger than new orders. Therefore, the backlog has contracted every month but one since April 2014. In 2015, the backlog has trended down sharply, indicating a significant decline in capacity utilization among processors. Employment contracted for the first time since August 2013. Exports contracted for the sixth straight month. Supplier deliveries continued to lengthen.
With the rebound in oil prices and the stabilization of natural gas prices, the material prices index has trended up since May 2015. However, the rate of increase in material prices is still near the lowest rate previously recorded, which was back in the summer of 2012. Prices contracted for the seventh month in a row. The rate of decrease has generally accelerated in each of those seven months. Future business expectations improved modestly in June. That was the first improvement in this index since December 2014. However, expectations have been about 5% below their historic average in the last two months.
Plants with more than 250 employees contracted for the third time in five months. Facilities with 100-249 employees grew for the seventh straight month. Companies with 50-99 employees expanded for the third time in four months. Processors with 20-49 employees contracted at a modest rate for the second month in a row. Processors with 1-19 employees contracted for the sixth month in a row.
The North Central-West and the Southeast were the only two regions to grow in June. The index was barely above 50.
Future capital spending plans for the next months were about 50% of their historic average in June. They were 58% less than they were one year ago. Future spending plans have contracted more than 21% compared with one year ago in each of the last five months.
European plants are the first to use several new technologies for solvent-based recovery of PVC wire coatings, centrifugal recycling of post-consumer nylon carpet, and mechanical separation of multi-material flakes.
Considering the high cost of resin and heightened concerns for product quality, it is surprising that so little attention is given to the impact of regrind quality on plastics processing.
There are lots of ways to economize on resin costs, but here are four that you may have overlooked: negotiating smarter resin contracts, buying “futures,” using recycled resins, and more efficient purging aids. The main idea is to give yourself more choices, no matter what direction resin prices go.