Raw Material Prices Continue to Soar

 

Back in January, we talked about an increase in polypropylene raw material prices. Now that we’re into Q2, that trend isn’t slowing down. Here’s a more recent market update about polypropylene and polyethylene prices and how these price spikes are leading to supply issues.

Resin Prices Climb as Supply Diminishes

While overall, commodity resin prices remain elevated, high-density polyethylene (PE) continues to climb higher, while some PE grades stay steady, according to a recent report from Plastics Today. Throughout Q1, PE producers implemented increases of $0.19/pound and so far through April increases of as much as $0.09/pound are on the table.

Polypropylene (PP) supplies are also in short supply, which caused prices to surge up to $1.50/lb at the beginning of the year. In March some PP prices started to stall, but low supply levels continue to be a concern.

In Europe, the plastics industry is facing an unprecedented shortage of raw materials, accompanied by surging prices. According to the European Plastics Converters (EUPC) the shortages are due to the global improving economy as well as exports of materials to North America and Asia. According to EUPC:

“The serious market disruptions currently taking place all over Europe are a symptom of the structural imbalance in Europe between the local production of and demand for raw materials and additives. Without restoration of that balance, periodic recurrence of gross disruption of the production chain is highly likely. Ultimately, end customers will also suffer damage due to disruptions in the delivery of (semi-) finished products.”

Here in the US, PP production plants were shut down in February, due to winter storms, causing production levels to fall further, down to a multi-year low according to Independent Commodity Intelligence Services (ICIS). PE plants also experienced shutdowns due to winter storms, and even once they recovered, their operating rates remained below normal through the end of March.

 

It remains to be seen how prices and supply levels will continue to evolve throughout Q2 and the rest of the year. We know that these price fluctuations and supply shortages can greatly affect your business, and we’ll continue to monitor changes and report on them throughout the year.