During COVID lockdowns, many industries worldwide were hit hard as businesses shut down and the international supply chain was severely crippled. Surprisingly, however, the plastics industry did exceptionally well during this time, as a majority of people who were spending more time at home invested their money in products for their household rather than on travel or vacations. This unprecedented boom in plastics has petered out over the last year, with experts projecting the plastics market to be extremely competitive over the next few years.<\/p>\n
Polyethylene, one of the most commonly used plastics, is a type of resin where demand is poised to grow at least 10% in 2023, despite the downward future projections of resin in general. With all the questions surrounding the future projections of the resin market, the experts at Bamberger Polymers break it down for you\u2026<\/p>\n
According to ReportLinker<\/a>, the global high-density polyethylene market is projected to grow from $91.73 billion in 2022 to $100.99 billion in 2023 at a compound annual growth rate (CAGR) of 10.1%. This is a significant increase compared to the rest of the current resin market, but many experts feel this growth won\u2019t last.<\/p>\n \u201cThere\u2019s a lot of polyethylene capacity coming on in 2023. The market overall has been depressed, and there\u2019s been concern over a recession,\u201d explained Greg Paradine, Director of Procurement for Commodities at Bamberger. \u201cThis year there\u2019s going to be growth, but it\u2019ll likely be a difficult year for us in North America.\u201d<\/p>\n \u201cThings have been interesting. People were surprised to see that sort of demand for polyethylene in the last few months,\u201d noted James Nelson, Product Manager for Bamberger. \u201cThere\u2019s multiple \u00a0announcements for increased capacity both in the near term and over the next few years all in North America.\u201d<\/p>\n \u201cAs far as consumer demand goes, I would say we see a fair amount of demand and growth in plastics like polypropylene and polyethylene,\u201d said Manolo Stolle, another Product Manager for Bamberger. \u201cHowever, many people still feel we\u2019re heading into a recession, so we may not see typical growth this year.\u201d<\/p>\n Despite the reports of increased demand in polyethylene, many experts in the plastics industry don\u2019t necessarily see this as a sign of growth for resin in general. Several significant global events in the past few years have had a major impact on resin distribution.<\/p>\n Many industries struggled to keep their businesses going during the COVID-19 pandemic, but plastics was one of the few industries that was able to thrive:<\/p>\n \u201cSince plastic was so necessary in a variety of different industries, the plastics industry had an exceptional year in 2020,\u201d explained Greg Paradine. \u201cPlastics in medical, packaging (takeout and delivery), home improvement projects, etc. exploded during COVID, which benefited the plastics industry greatly.\u201d<\/p>\n \u201cCOVID definitely impacted market projections of plastics,\u201d agreed James Nelson. \u201cPeople pivoted and bought a lot of plastic products during that time, specifically the medical markets needed plastic components for breathing apparatuses and PPE, etc.\u201d<\/p>\n As we are a few years out of COVID lockdowns, however, there has been a new global event that has significantly affected the plastics industry: the Russia\/Ukraine War.<\/p>\n \u201cThe Russia\/Ukraine war has negatively impacted plastics, especially Europe. Essentially, they are in a recession, and they\u2019re not taking as much resin as they typically do,\u201d Greg Paradine explained. \u201cThat\u2019s been a negative impact on the industry for sure. The war hasn\u2019t affected the US market as much, but Europe and Asia have been greatly affected.\u201d<\/p>\n \u201cThe Russia\/Ukraine war has certainly impacted things: we used to have various supply avenues from Russian, however we have now looked to other sources for resin both within Europe and outside to fill the gaps in supply,\u201d James Nelson stated.<\/p>\n Despite the unprecedented boom in plastics during COVID lockdowns, more recent global events like the Russian\/Ukraine war have had a more negative effect on the industry overall. In fact, many industries all over the world are projecting that a global recession in plastics will happen in the foreseeable future.<\/p>\n High-density polyethylene (HDPE) and low-density polyethylene (LDPE) are some of the most common plastics, and many markets will undoubtedly be impacted in the event of a global recession. Plastic film, in particular, is one of the most common applications that utilizes polyethylene, which is still projected to grow in 2023.<\/p>\n \u201cI deal with more flexible applications, such as bags and plastic food wrap, etc., and I do think there\u2019s been some growth in the market,\u201d explained Manolo Stolle. \u201cAnother segment that continues to be strong is packaging in medical applications.\u201d<\/p>\n \u201cPolyethylene film is a big market, such as film used in meat, produce and cheese wraps. The medical industry is also a strong market for polyethylene film,\u201d confirmed Greg Paradine.<\/p>\n Greg also discussed other markets that utilize polyethylene: \u201cThe medical industry is strong, and automotive is a big plastic user as well. However, the building market is definitely down this year compared to the time during the COVID lockdowns \u2013 fewer people are doing home improvement now.\u201d<\/p>\n With the future growth of plastic resin so uncertain, many petrochemical companies who partner with distributors like Bamberger, are trying to figure out what their next steps will be.<\/p>\n Since polyethylene is poised to grow so much in 2023, many petrochemical companies are preparing for more supply and demand with that particular resin.<\/p>\n \u201cShell is entering the market for the first time in a long time,\u201d said James Nelson. \u201cThey have a multi-billion-dollar facility being built, and Bamberger is a distributor for their HDPE. They have had various issues to get started, however once they\u2019re fully operational and the plant is running at a steady state it will be exciting to see the impact they have on the market. I know everyone at Bamberger Polymers is excited that we\u2019re part of their entrance into the North American market versus being on the outside looking in.\u201d<\/p>\n Many petrochemical companies have invested billions of dollars in building new facilities but they now face a lot of pressure because of too much supply,\u201d explained Greg Paradine. \u201cBecause of the over-supply situation, there will be pricing pressure and production rates will need to be decreased or export rates will need to increase significantly. The new companies, like Shell and SABIC, who we are partnered with, won\u2019t be as willing to slow down their reactors because they need to make money on their investments. This will make for an interesting and volatile market for the next few years.\u201d<\/p>\n Many experts have noted that, in spite of the economy likely heading into a recession, there seems to be some hope for the future.<\/p>\n \u201cThings have gotten better at the ports, but we\u2019re not yet at the level of export needed to keep the domestic market balanced at normal production rates\u201d commented Manolo Stolle. \u201cPolyethylene prices are still likely to be very competitive and most likely will drop.\u201d<\/p>\n Bamberger Polymers is a thermoplastics resin distributor offering a wide material portfolio of engineering and commodity thermoplastics, including HDPE and LDPE resin. As an intuitive leader in the industry, Bamberger collaboratively solves tomorrow\u2019s problems with integrity, nimbleness, and respect while providing quality products delivered on time. We ship more than 1.6 billion pounds of bulk and packaged resins to manufacturers for customized projects every year, and our trusted relationships with customers and suppliers are always founded on consistent communication and support from order to shipment.<\/p>\n Want to learn more about how Bamberger can help with your resin distribution needs? <\/strong>Contact our offices today to start a conversation.<\/strong><\/a><\/p>","protected":false},"excerpt":{"rendered":"Global Events Affecting Resin Distribution<\/h3>\n
What Industries are Impacted by Polyethylene?<\/h3>\n
How Petrochemical Companies Handle Resin Market Projections<\/h3>\n
Bamberger is Here for Manufacturers\u2019 Resin Needs<\/h3>\n