AMI, based in Bristol, has Polymer Demand in NAFTA, its latest edition in the Polymer Demand series.
Despite the antagonism towards the trade bloc from the Trump administration, the joint Canada, USA and Mexico region forms the third largest regional polymer market in the world and the USA is the world’s second largest economy in terms of purchasing power parity.
Some of the industry’s leading polymer producers are based in North America, with pioneering production capabilities, the technological prowess in the US has enabled development across the entire plastics supply chain.
The bonanza in shale gas extraction has stimulated the polymer market in NAFTA through provision of cheap polymer feedstock and facilitating an increase in domestic manufacturing productivity through low energy and operation costs. A 58 per cent increase in natural gas extraction is forecast between 2017 and 2040 which suggests that the US will have a raw material and electric power cost base that is on a par with that in the Middle East.
In the context of the growing degree of globalisation, market maturity, elevated environmental awareness, the success in the automotive industry combined with a growing penetration of plastic in flexible packaging and a resurgence in construction activity, the plastics industry has been enabled to prosper in the North American market. Polyethylene, in particular linear low-density grades, have been spearheading the rise in film demand for flexible consumer and industrial packaging largely due to its enhanced mechanical properties enabling downgauged.
The emerging economy of Mexico has played an important role in driving the plastics industry forwards and has witnessed growth above that of the regional average. A growing middle class with more expendable income, a large export economy that competes at a global level and legislative reforms geared towards developing the Mexican economy have been instrumental in the nation’s polymer demand increase above three per cent per year in the five years leading up to 2017.
The automotive industry is showing signs of maturity with 2017 seeing the first year since 2009 that US output did not grow. However, the automotive industry continues to attract investment and Mexican production has remained strong. There still remain opportunities for plastics to penetrate the automotive industry with incorporation of functionality features such in built satnavs, onboard computers and cameras as well as improved material grades that facilitate light weighting.
The ongoing NAFTA negotiations cast a degree of uncertainty on multiple industries as trade tariffs may come into effect therefore impacting the supply chain. However, efforts are being made to support general development across the region through protectionist policies and fiscal stimulus which is expected to catalyse growth in the plastics industry.
Overall growth of the North American polymer market is forecast to be 2.7 per cent each year through to 2022, with a moderate variation between the slowest growing market of Canada and the fastest growing of Mexico.