The 2018 Global Trends report, published by the Plastics Industry Association (PLASTICS), depicts a global plastics industry that is thriving despite numerous political and societal threats to the continued, unfettered operation of its supply chain.
At the time of this writing, the U.S. has attempted to rectify its trade imbalance with its trading partners. Existing free trade agreements have been updated and higher import tariffs have been imposed on a broad range of products—from aluminum and steel to other products vital to U.S. manufacturing, including plastics materials, machinery, products and molds.
Meanwhile, in the last 12 months, anti-plastics sentiment has grown as concerns about marine litter and waste have gripped the public consciousness. This has given proponents of material deselection a much greater audience for their arguments, and the introduction of bills that ban products like straws, bags and plastic foodservice packaging has continued, mainly in the U.S. and mainly in coastal states and communities.
For its part, PLASTICS believes that tariffs are not the appropriate tool to correct U.S. trade imbalances.
Additionally, the industry acknowledges the seriousness of the threat posed to the environment by the improper disposal of its materials and products. It has vocally supported efforts to include recycling and waste management as priorities in any future plans to improve waste management infrastructure, and continually worked with partners to educate consumers about proper disposal and the importance of ensuring that no plastics end up where they shouldn’t.
Furthermore, PLASTICS itself continues to conduct numerous pilot projects aiming to develop new markets to give value to material that, as yet, remains an untapped resource, primed for profitable and environmentally-beneficial exploitation. PLASTICS is working to change the way that companies and countries think about waste.
The work continues. And yet, despite these political headwinds and the ever-swinging pendulum of public opinion, growth has continued for the U.S. plastics industry and demand for plastics has remained remarkably resilient.
Trade Balances and Demand
The U.S. plastics industry trade balance fell nearly 40 percent in 2017, from $4.8 billion in 2016 to $2.9 billion in 2017. Imports increased by 9.3 percent during the same period, while U.S. exports rose by only 5.2 percent.
While some might suggest that this indicates a weakening U.S. plastics sector—when we look at consumption, the opposite is true. Apparent consumption of plastics industry goods—used as a measure of demand—increased in 2017 by 6.0 percent, from $286.2 billion in 2016 to $303.3 billion, a large increase that outpaced growth in U.S. plastics industry shipments overall (which grew by 5.2 percent in 2017). Apparent consumption of plastic products specifically grew by 5.5 percent, from $212.5 billion to $224.2 billion in 2017.
Tariffs and the Plastics Industry’s Trade Imbalances
As it was with the U.S. plastics industry in 2017, a shrinking trade surplus can be less a sign of sector weakness than an indication of greater demand for the sector’s products—so much so that the domestic industry has been unable to meet this demand and imports become necessary to meet it.
In its efforts to reduce imbalances driven by unfair trade practices, the U.S. would be better served taking a more careful, limited approach to the application of tariffs, while also highlighting the opportunities these figures present for domestic companies.
As has been noted by the Global Trends report for several consecutive years now—in the section of the report discussing “true” consumption, which measures what the U.S. actually consumes, rather than “apparent” consumption, which measures what actually leaves the gates of U.S. plastics companies—the U.S. market’s needs are greater than what’s currently being provided by the domestic industry.
This presents an opportunity for plastics companies in the U.S. to identify gaps that are currently being filled by imports and expand into those markets.
PLASTICS stands ready to join policymakers in finding ways to help domestic companies meet the needs of the U.S. market and to innovate and develop new technologies, manufacturing processes and products in such a way that ultimately decreases the industry’s reliance on imports. Still, the U.S. plastics industry is a major player in international trade, and its impacts are felt in every corner of the globe.
In the spirit of helping U.S. plastics companies find new opportunities to export their goods and build new trade relationships abroad, PLASTICS is publishing an exclusive ranking of every nation’s plastics industry—new this year to the Global Trends report and available only to members. This global ranking of industries will provide data to PLASTICS members that can be used to identify new markets so that the U.S. can meet the plastics demands of both developed and developing countries.
Access to the ranking is included as part of PLASTICS membership, while non-member companies will be able to purchase the ranking for a fee. Moving forward, data will be prepared as a benefit to both PLASTICS members and as a way to closely track the impact of the U.S. plastics industry on the global community.
Mexico and Canada Remain Top Trading Partners
While the U.S. industry has an impact all over the world, its greatest relationships are found closest to home. Despite the uncertainty that clung to the renegotiation of the North American Free Trade Agreement (NAFTA) during the latter half of 2017, last year the U.S. plastics industry’s already-sturdy relationships with Mexico and Canada both became even stronger. U.S. plastics companies exported $15.7 billion to Mexico and $12.5 billion to Canada in 2017, maintaining their largest trade surplus—$10.6 billion—with Mexico, as they had in 2016 as well.
This speaks to the depth of the integration of the North American plastics supply chain. PLASTICS is optimistic that the modernized NAFTA replacement—the U.S.-Mexico-Canada Agreement (USMCA)—will benefit all three economies and give plastics companies throughout the continent the certainty they need to grow their business and find new ways for plastic materials and products to deliver real benefits.
A Resilient Trade Surplus
The U.S. plastics industry has maintained a trade surplus for as long as it has—despite its fluctuations and despite structural shifts in the global economy—which attests to the strength of its position in the global market.
There are many individual slivers of the U.S. manufacturing industry where trade imbalances and deficits are driven by underhanded practices and bad faith on the part of our global trading partners. These segments could conceivably benefit from the narrow and targeted application of tariffs to specific trading partners.
However, the plastics industry as a whole is not among these industry segments, despite the administration’s decision to impose tariffs on a broad portion of the industry.
In many ways, the global state of play for trade remains much the same as it did when PLASTICS published the last edition of the Global Trends report, only more so. The plastics industry and the global economy both benefit from free trade. The industry continues to innovate, finding new and seemingly limitless applications in which these materials can improve on the status quo. Our nearest trading partners remain our strongest.
Growth remains the goal, and despite the threats that seemed to loom large at the beginning of 2017, the North American plastics industry—its thousands of companies and its millions of workers—has remained healthy and hiring and will continue to do so—as long as global plastics trade remains free and fair.
Global Plastics Rankings™
Top 1–10 Countries by Trade volume (US$ Billion)
China, the U.S and Germany are the top three key players in the global plastics trade. The volume of plastics trade in each country in 2017 was above $100 billion. China’s plastics trade volume was $146.5 billion—topping the list—followed by the U.S. and Germany with plastics trade volumes of $122.2 billion and $115.9 billion, respectively.
The plastics trade volume in the three countries account for 20.2 percent of the global plastics trade. Belgium, France, Italy, Korea, Japan, the Netherlands and Mexico round out the top 10 key players in global plastics trade.
The volume of plastics trade in the top 10 countries accounted for more than a third (36 percent) of plastics global trade volume in 2017. Completing the top 20 countries account for almost half (49 percent) of plastics global trade volume. Listed below are the remaining countries which comprise the top 20.
Top 11–20 Countries by Trade volume (US$ Billion)
Canada—a former party of the NAFTA and a new participant in the U.S.-Mexico-Canada Agreement (USMCA), along with the U.S. and Mexico—ranked twelfth in 2017. While the industry struggled to conceive of a situation in which NAFTA would have ceased to exist, the prolonged uncertainty of the renegotiation process in 2017 did threaten to strain the fluidity of trade between the three member nations. Nonetheless, Canada and Mexico’s performances in the Global Plastics Ranking™ and their continued position as the U.S. plastics industry’s most important trading partners attest to the success of the three country’s historic economic integration and to the fact that the supply chain linkages created through NAFTA—and preserved and strengthened by the USMCA—have yielded benefits for all three nations.
China’s role in the global plastics trade has evolved over time—surpassing other countries in terms of trade volume. With China and the U.S. ranked first and second, respectively, the continuing trade dispute between the two countries negatively impacts the global plastics industry. Both countries account for a substantial portion of the global plastics trade. Moreover, the current trade dispute is broad-based, impacting other industries that have been subjected to higher import duties imposed by the U.S. and by tariffs imposed by China in retaliation. Just like NAFTA, the trade relations between China and the U.S. have grown over time and need to be strengthened. Plastics is used in a variety of industries and the free movement of goods and services in all four key categories of the plastics industry must be maintained. While the recent effects of higher tariffs on U.S.-China trade will be uneven across companies and industries, the net effect on the industry and the economies of both countries will be negative—directly in production, owing to higher input costs, and indirectly in consumption, due to higher prices.
Industry Wide Trends
The industry’s trade surplus decreased 39.9 percent to $2.9 billion in 2017 from $4.8 billion in 2016.
- Industry exports rose 5.2 percent and imports rose 9.3 percent.
- Mexico and Canada remained the U.S. plastics industry’s largest export markets. In 2017, the industry exported $15.7 billion to Mexico and $12.5 billion to Canada.
- The industry had its largest trade surplus with Mexico in 2017—$10.6 billion.
- China is the industry’s third-largest export market. However, the industry, overall, had its largest trade deficit with China—$11.5 billion in 2017.
- The estimated value of domestic shipments grew 5.2 percent in 2017, to $306.2 billion. Shipment figures were boosted by strong U.S. and world economies.
- Exports were 19.7 percent of the value of domestic shipments in 2017, the same as in 2016.
- Reflecting the greater use of U.S. plastics output domestically, apparent consumption of plastics industry goods grew 6.0 percent, from $286.2 billion in 2016 to $303.3 billion in 2017—faster than shipments growth.
- “True” consumption includes all the resins and plastic products that U.S. residents consume, including those that are contained in imported goods. The “true” consumption growth rates computed in this study show that underlying U.S. plastics demand remains solid. It also shows the U.S. market for plastics is larger and growing faster than the market is being addressed by domestic producers.
Looking ahead, the key players in the global plastics trade will face challenges from different fronts—labor, technology, environmental concerns, demographics and customization. Workforce development is an issue in many countries due to aging populations. Volatility in plastics feedstock prices due to the strengthening U.S. dollar and fluctuating commodity prices will also affect the competitiveness of different countries. The higher cost of energy and other inputs to production due to environmental concerns will impact plastics trade down the road. Customization of products to meet an individual’s tastes, preference and the customer’s biometrics, which has started in some industries, will require technical enhancement skills in manufacturing throughout the value chain. For the key players in the global plastics trade, recognizing these global issues surrounding the industry will be vital to maintaining their respective positions.
Copyright and Disclaimer
This report is copyright 2018, the Plastics Industry Association (PLASTICS). All rights reserved. The methodology used to prepare this report is the sole property of Probe Economics LLC.
This report is offered in good faith and is believed to be accurate at the time of its preparation, but is offered without warranty of any kind, either express or implied as to merchantability, fitness for a particular purpose, or any other matter. PLASTICS does not endorse any products or 3rd parties that may be mentioned in the report and accept no responsibility for any loss or damage arising from its use. We strongly recommend that you seek separate counsel for guidance to the accuracy and appropriateness of the report.
For a full copy of this report, visit plasticsindustry.org/globaltrends2018.