Plastics Technology

SEP 2017

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Registering at 52.9, the Gardner Business Intelligence "Plastics Industry Business Index" moved up a tick in July, falling just short of its year-to- date average of 53.7 (see Fig. 1). Compared with July 2016, the index for the overall industry is up 6.2 points. Among custom processors, the index registered 49.5 in July, falling into contrac- tion territory as declines were recorded in backlog, production, and new orders. For processors, the average production reading at 59.5 over the first six months of 2017 was better than the first six-months of any of the last five years. This made the July 2017 production reading of 45.2—a 15-point drop since May—an unpleasant surprise. Although new orders and production data from custom processors has been more volatile over the last two years, both metrics have moved closely together, with one result being that backlogs during 2017 have averaged a reading of 49.7, suggesting that backlog conditions have not changed significantly despite volatility elsewhere. In Fig. 2, the gap in the index values for material prices and prices received, a trend first witnessed among custom proces- sors in late 2016, continued through the first-half of 2017. The divergence in these indexes reached its apogee this past March, before being cut substantially as material prices have tracked lower since April. By comparison, the index for prices received has been stable, with an average reading of 54.9 in the year to date, indi- cating consistent but mild growth in pricing power among custom processors. Overall industry index is up 12% from last July, though processor numbers dip. July's Index: 52.9 By Michael Guckes Chief Economist Michael Guckes is the chief economist for Gardner Business Intelligence, a division of Gardner Business Media, Cincinnati. He has performed economic analysis, modeling and forecasting work for nearly 20 years among a wide range of industries. Michael received his BA in political science and economics from Kenyon College and his MBA from Ohio State University. Contact: (513) 527-8800; mguckes@gardnerweb.com; gardnerweb.com. How Material Prices and Prices Received Are Tracking Plastics Industry Business Index: All & Custom Processors 65 60 55 50 45 40 35 80 70 60 50 40 35 JAN 13 JULY 13 JAN 14 JULY 14 JAN 15 JULY 15 JAN 16 JULY 16 JAN 17 JULY 17 Values below 50 indicate contraction Values below 50 indicate contraction Values above 50 indicate growth Values above 50 indicate growth Overall July 2017 Index 52.9 Material Prices Index 65.4 Custom July 2017 Index 49.5 Prices Received Index 53.8 JAN 13 JULY 13 JAN 14 JULY 14 JAN 15 JULY 15 JAN 16 JULY 16 JAN 17 JULY 17 FIG 1 FIG 2 89 SEPTEMBER 2017 Plastics Technology PTonline.com YO U R B U S I N E S S G A RDNER BUSINE S S INDE X : PL A S T IC S

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