Pandemic’s Impact on U.S. Plastics Appears Weaker Than Originally Forecast
A second quarter economic report from the Plastics Industry Association (PLASTICS) reveals the possibility of a less severe coronavirus slowdown in the plastics industry than previously expected.
A quarterly report from the Plastics Industry Association (PLASTICS) acknowledges that the coronavirus pandemic will continue to be a growth-limiting factor for the U.S. plastics industry, but forecasts lower, single-digit declines for the market in 2020.
Plastics materials and resin production is expected to increase 0.3% this year, while plastics products, machinery and mold production are still expected to drop in 2020, by 7.8%, 6.3% and 7.2%, respectively. All of those represent smaller contractions than previously forecast. PLASTICS believes the industry will experience its largest declines in the second quarter. That decline is attributed to continuing weakness in consumer spending and business investment spending throughout 2020. The report noted that consumer confidence will remain low given the high unemployment rate.
In plastics products, quarterly production volume is projected to have decreased by 14.3% compared to the second quarter of 2019. Looking forward, PLASTICS says production volume declines will slow in the third and fourth quarter by 8.5% and 6.8%, respectively. The demand for consumer essentials was stable in the second quarter, but depressed demand in automotive, housing, food services and restaurants dragged overall demand down.
PLASTICS has nearly halved its negative outlook for plastics machinery volume in 2020 to a 6.3% decrease vs. the previous 12.1% projection. The estimated second quarter year-over-year decrease in production was 10.9%. Going forward, PLASTICS projects that production volume will be 7.7% and 6.5% lower in the third and fourth quarter, respectively.
Industrial molds data, which are used as a proxy for plastics molds, show that production volume is now expected to fall 7.2% in 2020, which is lower than the original 11.1% decrease predicted. Mold production fell 11.5% year over year in the second quarter and is estimated to decline further in the third and fourth quarter by 8.6% and 7.0%, respectively.
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