Canadian Plastics

N. American plastics machinery shipments down in Q3 2016: Plastics Industry Association

This was the first quarterly decline since Q3 2015, the Association's report said, and it was only the second time there was a quarterly decrease since the post-recession recovery began in 2010.

December 18, 2016   Canadian Plastics

North American shipments of plastics machinery decreased year-over-year in the third quarter of 2016, according to new statistics from the Plastics Industry Association’s Committee on Equipment Statistics (CES).

This was the first quarterly decline since Q3 2015, the CES said, and it was only the second time there was a quarterly decrease since the post-recession recovery began in 2010.

The preliminary estimate for shipments of primary plastics equipment (injection molding, extrusion, and blow molding equipment) for reporting companies totaled US$294 million in Q3 2016, the report said – a drop of 2.4% compared to the US$302 million total from Q3 2015, and a decline of 6.5% from the US$315 million reported in Q2 2016.

“Shipments of plastics equipment rose steadily during the six-year period from 2010 through 2015, but this trend hit a plateau in 2016,” said Bill Wood of Mountaintop Economics & Research Inc., the plastics market economist who analyzes and reports on the plastics machinery market for the CES. “The quarterly comparison will be difficult in the fourth quarter of this year, so the annual growth rate will continue to moderate in the near term. But the incentives to invest in new equipment remain strong, and if Congress passes some meaningful corporate tax reform in 2017, they may even improve.”

Additionally, the shipments value of injection molding machinery for reporting companies decreased 6% in Q3 of this year when compared with the total from Q3 of 2015. The shipments value of single-screw extruders decreased 3.8% in Q4 2016 when compared with Q3 2015; the shipments value of twin-screw extruders (which includes both co-rotating and counter-rotating machines) improved by 27.6% in Q3 2016 when compared with Q3 2015. (The shipments value of blow molding machines for Q3 2016 has not been made available.)

New bookings of auxiliary equipment for reporting companies totaled US$119 million in Q3 2016, an increase of 0.7% over the total from Q3 2015 – but a drop of 3% when compared with the total from Q2 2016.

Despite these figures, Wood remains optimistic. “Growth in the U.S. GDP is gaining momentum in the second half of 2016, and the improving economic fundamentals bode well for consumer spending in the coming year,” said Wood. “I still expect consumer demand for plastic products to increase at a sustainable pace in the coming months. Our forecast for the economy in 2017 calls for annual, real GDP growth in the range of 3%, 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 Q3 survey, 86% of respondents expect market conditions to either hold steady or get better during the next year.

The outlook for global market conditions also improved in Q3 2016. “Mexico was the region with the strongest expectations for improvement in the coming year,” Wood said. “North America and Europe are expected to be steady-to-better. The outlooks for Asia and Latin America are more optimistic than they were last quarter, but the majority still expects that conditions will hold mostly steady.”

The respondents to the Q3 survey 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. Expectations for construction and appliances improved, while automotive slipped. Expectations for all other end markets call for steady-to-better demand to prevail in 2017.


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