Plastics and rubber - Industry Overview

US Industrial Outlook, Annual, 1993 by Raimundo Prat

Constant dollar industry shipments for plastic and rubber are forecast to grow by 3 and 4 percent, respectively. Mild recovery is expected for tires, as well as for miscellaneous rubber and plastic products.

Before reading this chapter, please see "How to Get the Most Out of this Book," on page 1. It will answer questions you may have concerning data collection procedures, forecasting methodology, and chapter references. For additional information on topics related to this industry, see chapter 5 (Construction), chapter 7 (Construction Materials), 35 (Motor Vehicles and Parts), and chapter 11 (Industrial and Agricultural Chemicals). This chapter reviews prospects for plastics, for plastic products, for rubber materials, and also for rubber products.

PLASTIC MATERIALS

The plastic materials industry (SIC 282) covers highly moldable materials used singly or in combination, to make a wide variety of plastic products. Plastic materials are usually classified along two criteria: quantity (commodity versus specialty) and structural use (thermoplastic versus thermoset). Most plastics can be grouped accordingly.

Commodity plastics, also termed tonnage plastics, are manufactured according to standard processes, and in large quantities. They are usually sold to a restricted number of large-volume users.

Whether a material is classified as thermoplastic or thermoset depends upon its final processing. Thermoplastics account for at least 80 percent of total U.S. production. In contrast to thermosets, thermoplastics can be repeatedly softened or hardened by heat, even after they have been molded. Frequently used and relatively unspecialized, commodity thermoplastic resins include the polyethylenes (low density, linear low density, high density), polypropylenes, polystyrenes, and polyvinyl chloride. Specialty resins are generally produced on a customized basis, developed to meet specific end-use requirements.

Among the first plastics to have been developed, the thermosets now account for less than one-fifth of total output. Thermosets are characterized by their superior electrical properties and ability to withstand extreme chemical and temperature environments.

In recent years, engineering and specialty thermoplastics emerged as high-growth products, used in situations where high resistance to heat and mechanical stress are important. Typical engineering resins are the cellulosics, the polycarbonates and the polyetheretherketones.

The basic manufacturing sequence is summarized as follows: three primary inputs (petroleum, natural gas and coal) are subjected to various processes (refining, distilling, fractionating). This results in what are normally referred to as petrochemical feedstocks, including gases, light oils, middle fractions, and heavy oils. These basic materials or base stocks are then mixed with other substances (ammonia, formaldehyde)--or are chemically decomposed even further to yield intermediates. The latter can then be catalyzed into monomers and finally to polymers, or resins. Downstream processing into final plastic products is discussed below.

Increased productivity and more efficient processing equipment, resulting from large investment in R&D, allowed U.S. suppliers to become extremely competitive in domestic markets. Industry concentration throughout the 1980's has remained relatively low in comparison with other capital-intensive industries; 8 companies in 1987 controlled 40 percent of output, and the largest 20 about 66 percent. Increased competition has put considerable pressure on prices and made it feasible for plastics to penetrate other material markets (such as wood, glass, and metal). High-performance characteristics, coupled with highly price sensitive demand for most plastic materials, continues to drive material substitution--a fact influencing industry prospects.

INTERNATIONAL COMPETITIVENESS

The United States is still by far the world's largest producer of plastic materials, with nearly 36 percent of total estimated world production, followed by Japan (with 16 percent) and Germany (with 9 percent). Not surprisingly, the United States has been a major exporter in recent years; sales to overseas markets constitute approximately 20 percent of total industry shipments. Exports for SIC 2821 more than doubled throughout the 1980's, from $2.7 billion (4,194 million pounds) in 1980 to $6.3 billion $6,500 million pounds) in 1990. Imports went from $263 million (247 million pounds) to $1.8 billion (210 million pounds) during the decade. The bulk of exports were largely tonnage resins (the propylenes, polyvinyl chloride, polyethylene perephthalate and polystyrene). Canada and Japan have maintained their position as major trading partners. Imports represent less than 10 percent of total industry shipments. Recent increases in imports are partly explained by the influx of ethylene-based polymers from Canada and Saudi Arabia. Polyvinyl chloride, acrylonitrile-butadiene-styrene (widely known within the industry as ABS), and specialty polystyrenes were also imported in significant amounts, mostly from Japan, Germany, and the United Kingdom.