NPE ’24: Plastics industry headwinds likely to persist through 2024

ORLANDO (ICIS)–Headwinds for the plastics industry including higher cost of capital, weaker household spending momentum and capacity adjustments will likely persist through 2024, according to a presentation by Perc Pineda, Chief Economist at PLASTICS, at this year’s NPE show.

The US Consumer Price Index (CPI) was up 3.5% year on year in March, with economists expecting inflation to average 3.1% this year, which is above the US Federal Reserve’s target of 2%. As a result, interest rate futures are now moving towards fewer cuts.

Elevated interest rates continue to negatively impact the petrochemicals industry, including US polyethylene terephthalate (PET), as high interest rates continue to result in weaker household spending.

Additionally, the US PET market continues to experience capacity adjustments. In March of 2023, Alpek Polyester announced it would be indefinitely shutting down its Cooper River, South Carolina, PET site. A few months later in September of 2023 the integrated polyester plant being built by Alpek, Indorama and Far Eastern New Century (FENC), under the joint venture Corpus Christi Polymers, announced it was pausing construction at its Corpus Christi, Texas, site because of inflation as well as high construction and labor costs.

Globally, Indorama announced in March 2024 that it is eyeing multiple sites and it is aiming to shut down.

Without interest rate cuts, headwinds in the US and global PET market will likely continue through 2024, despite an optimistic demand outlook for 2024 compared to 2023.

Thumbnail image shows multicolored PET preforms for plastic bottles

Produced by Plastics Industry Association (PLASTICS), NPE: The Plastics Show takes place 6-10 May in Orlando, Florida.