Plastic Resin Pricing... "It's Complicated"

​Not to be confused with the 2009 film staring Meryl Streep and Alec Baldwin (with some scene-stealing support from Steve Martin and John Krasinski) "It's Complicated" is the best way to describe how commodity plastic resin is priced in the marketplace.

If you purchase plastic pallets, you have likely experienced this pricing volatility first hand.

Traditional factors once ruled plastic resin pricing. All that has changed. Now, it's much more complicated.

The Good Old Days

​Here are the three biggest traditional factors that impact resin pricing:
  

1. Traditional supply and demand
2. Crude oil and natural gas prices (feedstock)
3. Energy costs

For 50 years these relatively straightforward influencers have kept most commodities resin prices trading in a narrow range. Hurricane Katrina did blow the lid off that, which brings us to our first “new” major influence.

Weather

In fact, the producing areas around Houston have always been subject to severe weather events. That said, the deep freeze of 2021 was unprecedented and caused disruptions in production that lasted for many weeks. Since then, the anticipation of weather interruptions is mentioned frequently and pointed to as an ongoing factor in the volatility of resin pricing. 

Labor
​
In the wake of the COVID-19 outbreak, we have our number two factor. To keep material flowing, producers have had to increase wages and use other tactics to attract workers, not always successfully. Shortages persist, even amid higher wages.

Complications

OK, so we have beautiful bright sunny weather, plenty of help, but prices are still jumping all over the place, mostly up. What gives? Well, here is where it really does get complicated. The short list:
  

• Packed warehouses (plenty of orders but not enough space)
• Port bottlenecks (amid strong export demand)
• Limited railcars, trucks, and ocean containers (did someone say fractured supply chain?)
• Elevated freight rates (in some cases double)
• Force Majeure declarations (the reactor is down because of one small part we cannot get)
• Volatile Energy cost complex (the most volatile since the Arab Oil embargo)
• Geopolitical Uncertainty in Europe (What will Putin do next?)
• Continuing COVID-19 lockdowns in Asia (freezing the largest economy in the world)
• The fear of weather, not just the weather (Yes, I am not kidding)

Which is why a pundit can make a living just trying to predict where resin prices might land next. 

Navigating Resin Prices

Would you like more detail on how resin prices might affect the cost of plastic pallets, containers and other material handling products you purchase? Post your inquiry here and watch for my next post about the recycled plastic material market.

​Post by: Hartson Poland, Business Development - Plastic