The experts within our Rubber & Plastics Group maintain ongoing contact with a wide range of knowledgeable sources to stay abreast of the issues and trends that could impact the industry’s M&A climate or otherwise influence our clients’ businesses.  Following are a few of the topics addressed in our most recent Rubber & Plastics Industry Review, which is published quarterly.

RUBBER & PLASTICS (2008: Q1) (View complete report)

Outlook for Commodity Resins

Commodity resin prices are off to a tumultuous start in 2008, with prices for polyethylene (PE), polypropylene (PP) and PET seeing recent drops and PVC stubbornly holding on to gains. Softer-than-expected demand and slow export business led to declines in PE prices, causing manufacturer margins to increase, which in turn led PE buyers to seek lower prices from their suppliers. The decline in exports has left North American manufacturers pleasantly surprised at how well domestic demand has held up in early 2008. PP and PE (especially HDPE) continue to benefit from the soft value of the U.S. dollar, which has effectively made the U.S. a low-cost supplier of those resins. After some difficult production and consolidation decisions made in 2007, the remaining resin producers are intent on rebuilding margins. By reducing overall capacity, forecasting resin production to better track fluctuating demand should become easier and eventually place pricing power solidly back in the hands of producers. Current expectations are that resin prices will average 5-10 percent higher in 2008 than in 2007.

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