As we approach the end of 1998, an historic year for plastic prices, it is well to ponder what this bodes for 1999. First of all, the deflationary trend we are experiencing can be traced back to the overall tumbling of industrial "commodity" prices for raw materials led by metals and followed by plastics. Certainly supply-demand ratios are contributory and as we have seen, the Asian economic crisis (which some are saying was presaged by Mexico's currency troubles) has led to a lessening of demand from that part of the world. This of course affects our economy and lower demand from Asia, which many producers felt would be an endless stream of growing demand, put us where we are today and there is no change in sight. It is expected to continue until at least 2Q 99.
A vivid example of this is the PE market. Price decreases in 1998 have totaled an average of 8 cents per pound for PE resin. This in the face of a 5.6% increase in HDPE sales and a similar increase in LLPE although LDPE sales are off 2.6%. Whatever happened to supply-demand in PE? Capacity is still being added because several producers are afraid some competitor will take market share. Thus this contributes to excess capacity keeping prices low or lower. The PE scenario is played over many times with other resins, thus sheet, rod, tube, film follows.
How many of us in distribution are adding capacity (read branches) in the face of steady not growing demand, because we fear a competitor will do it first? Some reflections may be in order before we ramp up 1999 -- and we haven't even talked about 2000 and Y2K factor. More on this in the first 1999 column.
Speaking of the year 2000 and discarding the Y2K subject, let's look at some MILLENNIUM MONOMERS.
Chiral plastics have been discovered which are "one handed" molecules which make a polymer look more like a crystal and imbues it with stable optical properties. Applications are optoelectronic devices, replacing fiber optics and opening up telecom applications for plastics. First attempts at this technology were made with polycarbonate by MOEC, Inc., Watervliet, NY.
For recycling buffs, 50 kinds of waste plastics have been sorted instantly in Japan by irradiating these materials (including PS and PE) thereby altering their infrared wavelengths. Even different grades of similar resins can be differentiated by use of a $30,000 machine whose only apparent difficulty is analyzing black material. But they're working on that.
Replacing glass in car windows has long eluded our industry. Now a new company, Exatec LLC (GE/Bayer jv) has been formed to overcome the previous shortcomings of plastics. This of course bodes well for further glass replacement by see thru plastics. The passing of glass? And only after 20,000 years -- in the year 2000? Stay tuned.
Melvin (Mel) W. Ettenson of TMX-Ain Plastics, B.S., Engineering, Lowell Technological Institute; M.B.A., NYU.; Lt. Comman-der, U.S. Navy; Owens Corning Fiberglas Corp., Mktg. Research Director; Uniglass Industries, Regional Sales Manager ; Dayco Corp., Sr. V.P. Cadillac Plastics Division; Member of the Society of Plastics Engineers, and The Society of the Plastics Industry. 248-356-4000, Ext. 320, FAX 248-356-4745.
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