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Discover How Americorp International Is Poised to Outperform Competitors in the Polyethylene Market
In the midst of challenging times brought about by the COVID-19 pandemic, many industries faced severe setbacks and disruptions to their operations. However, the plastics industry demonstrated remarkable resilience during this period, capitalizing on the shift in consumer spending habits. With people spending more time at home, the demand for household products made from plastics soared. While this surge in demand has gradually subsided, experts predict intense competition in the plastics market for the upcoming years.
Polyethylene, one of the most widely used plastics, is expected to experience a substantial growth rate of at least 10% in 2023, despite the overall downward trend projected for the resin market. At Americorp International, we understand the uncertainties surrounding the future of the resin market, and our team of experts is here to provide you with valuable insights.
Market Projections for Polyethylene in 2023
According to the esteemed market research firm ReportLinker, the global high-density polyethylene market is projected to reach $100.99 billion in 2023, reflecting a compound annual growth rate (CAGR) of 10.1% from the $91.73 billion achieved in 2022. This significant growth stands out amidst the challenging market conditions; however, industry experts are cautious about the sustainability of this upward trajectory.
Greg Paradine, Director of Procurement for Commodities at Americorp International, acknowledges the concerns surrounding the resin market: “There is a substantial increase in polyethylene capacity expected in 2023. Given the overall market depression and the prevailing fear of an impending recession, the coming year will likely be a challenging period for us in North America.”
James Nelson, Product Manager for Americorp International, adds, “The recent months have been quite interesting. We witnessed an unexpected surge in demand for polyethylene, and there have been multiple announcements regarding capacity expansions, both in the short term and over the next few years, primarily in North America.”
While consumer demand for plastics like polypropylene and polyethylene remains strong, Manolo Stolle, another Product Manager at Americorp International, highlights the prevailing concerns of a potential recession: “Although we are witnessing a considerable demand and growth in plastics, we cannot overlook the possibility of an impending recession, which might limit the extent of growth this year.”
Despite the reports of increased demand for polyethylene, industry experts caution against viewing this as an indicator of overall resin market growth. Several global events in recent years have had a profound impact on resin distribution.
Global Events Affecting Resin Distribution
The COVID-19 pandemic posed significant challenges to many industries worldwide. However, the plastics industry emerged as an exception, driven by its indispensable role across various sectors. Greg Paradine explains, “Due to the critical importance of plastic in different industries, the plastics sector experienced exceptional growth in 2020. Plastics became crucial in medical applications, packaging (takeout and delivery), and home improvement projects, among others, which significantly benefited the industry.”
James Nelson concurs, stating, “COVID-19 undeniably influenced the market projections for plastics. People shifted their buying patterns, resulting in a surge in plastic product purchases. Specifically, the medical sector required plastic components for breathing apparatuses and personal protective equipment (PPE).”
However, in the post-COVID era, another global event, namely the Russia/Ukraine War, has considerably impacted the plastics industry, particularly in Europe. Greg Paradine explains, “The Russia/Ukraine war has had a negative effect on plastics, particularly in Europe. The region is currently experiencing a recession, leading to reduced resin consumption. Although the impact on the
U.S. market is less pronounced, Europe and Asia have faced significant repercussions.”
James Nelson highlights the consequences of the Russia/Ukraine war: “The conflict has certainly affected our operations. We used to rely on resin supplies from Russia, but we have now diversified our sources within Europe and beyond to compensate for the supply gaps.”
Despite the unprecedented surge in plastics demand during the COVID-19 lockdowns, recent global events such as the Russia/Ukraine war have presented more challenges for the industry as a whole. Consequently, numerous sectors worldwide are projecting an impending global recession in plastics.
Industries Impacted by Polyethylene
In the event of a global recession, several markets will undoubtedly be affected by the fortunes of high-density polyethylene (HDPE) and low-density polyethylene (LDPE), two of the most commonly used plastics. One prominent application that extensively utilizes polyethylene is plastic film, which is projected to experience growth in 2023.
Manolo Stolle, who primarily deals with flexible applications such as bags and plastic food wrap, notes some growth in the market. He states, “I have observed growth in the market for flexible applications. Furthermore, packaging in medical applications remains a strong segment.”
Greg Paradine affirms this observation, stating, “Polyethylene film plays a significant role, particularly in applications such as meat, produce, and cheese wraps. Additionally, the medical industry continues to be a robust market for polyethylene film.”
Beyond packaging and medical sectors, other industries rely on polyethylene. Greg Paradine emphasizes, “The medical industry is robust, and the automotive sector represents a major consumer of plastic. However, the construction market is currently experiencing a decline compared to the time during the COVID-19 lockdowns, as fewer people are engaging in home improvement projects.”
Given the uncertain growth prospects of plastic resin, petrochemical companies that partner with distributors like Americorp International are striving to determine their next course of action.
Petrochemical Companies’ Approach to Resin Market Projections
Considering the projected growth of polyethylene in 2023, many petrochemical companies are gearing up to meet the anticipated increase in supply and demand for this specific resin.
James Nelson highlights Shell’s entry into the market, stating, “Shell is poised to enter the market for the first time in a long while. Their multi-billion-dollar facility is currently under construction, and Americorp International will serve as a distributor for their HDPE products. Although they have encountered some initial challenges, once the facility becomes fully operational and reaches a stable state, we expect it to make a significant impact. We are thrilled to be part of Shell’s entrance into the North American market, enabling us to collaborate closely rather than being mere observers.”
While several petrochemical companies have invested substantial amounts in new facilities, they now face pressure due to the excess supply. Greg Paradine explains, “Given the oversupply situation, these companies will experience pricing pressure, necessitating a reduction in production rates or a significant increase in export rates. The new players, including Shell and SABIC, with whom we have partnered, will be reluctant to curtail their reactor operations as they seek to generate returns on their investments. Consequently, the market is poised for an interesting and volatile period over the next few years.”
Despite the likelihood of an economic downturn, some experts remain hopeful for the future.
Manolo Stolle comments on the situation at ports, stating, “The situation at ports has improved, but we have yet to achieve the necessary export levels to restore domestic market balance and meet normal production rates. As a result, polyethylene prices are expected to remain highly competitive and may even decrease further.”
Americorp International: Your Trusted Resin Distribution Partner
Americorp International stands as a leading thermoplastics resin distributor, offering an extensive portfolio of engineering and commodity therm
oplastics, including HDPE and LDPE resin. Our company prides itself on being an intuitive industry leader, actively collaborating to solve tomorrow’s challenges with integrity, nimbleness, and respect. We provide quality products delivered punctually, shipping over 1.6 billion pounds of bulk and packaged resins to manufacturers for customized projects each year. Our commitment to maintaining trusted relationships with customers and suppliers is rooted in consistent communication and unwavering support, from order placement to shipment.
Would you like to learn more about how Americorp International can assist with your resin distribution needs? Contact our offices today to initiate a conversation.
