Plastics machinery shipments declined in Q4 2016

For the first time since the recovery in the plastics industry began in 2010, North American shipments of plastics machinery posted a second consecutive quarterly decrease, according to statistics compiled and reported by the Plastics Industry Association’s (PLASTICS) Committee on Equipment Statistics.

North American shipments of plastics machinery posted a year-over-year decline in the second quarter of 2016, the CES said, with the preliminary estimate for shipments of primary plastics equipment (injection molding, extrusion, and blow molding equipment) for reporting companies totalling US$361.7 million in Q4. “This was 7.4 per cent lower than the robust total of US$390.6 million from Q4 of 2015, but it was 24.2 per cent higher than the US$291.3 million from Q3 of 2016,” the CES said. “For the entire year, shipments of primary plastics equipment were up 1.2 per cent when compared with the annual total from 2015.”

“After rising steadily for six years, shipments of plastics equipment hit a plateau in 2016,” said Bill Wood of Mountaintop Economics & Research Inc. Wood is the plastics market economist who analyzes and reports on the plastics machinery market for the CES. “The annual total was just high enough to extend the string of annual increases to seven years. The quarterly comparisons will be difficult in the first half of 2017, but the underlying economic fundamentals will gradually improve. If Congress passes corporate tax reform in 2017, then the uptrend in this data may re-emerge later this year.”

The shipments value of injection molding machinery decreased 12.1 per cent in Q4 of 2016 when compared with the total from Q4 of 2015, the CES said. “The shipments value of single-screw extruders decreased 9.2 per cent; the shipments value of twin-screw extruders (which includes both co-rotating and counter-rotating machines) fell by 8.1 per cent in Q4 when compared with last year; and the shipments value of blow molding machines increased 9.1 per cent in Q4,” it said.

New bookings of auxiliary equipment for reporting companies totalled US$126.6 million in Q4 of 2016, the CES said. “This represented a slight 0.1 per cent decline from the total from Q4 of 2015, but it was a gain of 5.0 per cent when compared with the total from Q3 of this year,” it said.

The good news? “After a modest decline in 2016, overall demand for plastics products in the U.S. will start to rise again in 2017,” Wood said. “Our forecast for the economy in 2017 calls for annual, real GDP growth in the range of three per cent due primarily to steady improvement in wages and household incomes resulting from stronger employment levels.”

The CES also conducts a quarterly survey of plastics machinery suppliers that asks about expectations for the future. According to the Q4 survey, 91 per cent of respondents expect market conditions to either hold steady or get better during the next year. This is up from 86 per cent in the previous quarter.

“The outlook for global market conditions also improved in the third quarter,” the CES said. “North America was the region with the strongest expectations for improvement in the coming year. Mexico is expected to be steady-to-better. The outlooks for Asia and Latin America continue to be more optimistic than they were in the previous quarter, while the outlook for Europe weakened modestly.”

The respondents to the Q4 survey still expect that medical and packaging are the end-markets that will enjoy the best growth in demand for plastics products and equipment in the coming year, the CES continued. “The expectations for automotive demand improved after a sharp dip in the previous quarter,” it said. “Expectations for all other end-markets call for steady-to-better demand to prevail in 2017.”