Why did the price of plastic resin spike in the fourth quarter of 2021?
In 2021, when the whole world is trying to adapt to the global Covid-19 pandemic, many industries are affected; the plastic industry, in general, remains unchanged and even thrives. Disruptions in the global supply chain, increasing demand for plastic packaging materials, and plastic production shutdowns have led to a severe spike in the price of plastic goods. Specifically, the world market recorded that the price of plastic resins tends to skyrocket in the mid-2021 period and is expected to increase dramatically in the fourth quarter. So what is the cause of this spike? And how will the upcoming plastic resin market change? Let’s find out the reasons that cause the price of plastic resin to increase.
Plastic resin prices increased due to a series of factors affected by the epidemic.
- Rising oil prices and bans on crude oil import and export due to the epidemic
The fluctuating world oil price directly affects the price of plastic resins because the raw materials for producing plastic granules are petroleum products such as PP & PE. Crude oil prices increased sharply from February to March 2021, reaching a 2-year high at one point.
Till now, according to the oilprice.com website, on November 15, the price of US WTI light sweet crude oil increased by 0.33% to 81.06 USD/barrel at 6:40 am (Vietnam time); while Brent crude oil price also increased 0.23% to 82.36 USD/barrel.
Moreover, as of early March 2021, oil prices increased by more than 25% compared to the beginning of the year. The world economy is gradually recovering, and energy demand is rising.
2. Some large plastic resin factories are in the maintenance phase or closed because of Covid.
The supply of plastic pellets is becoming more competitive and tight in the regions, so some sizable plastic resin factories need to maintain or upgrade technology. Some factories stopped working, causing supply disruptions:
– Lotte Chemical Titan’s 200,000 tons/year factory in Malaysia stopped working.
– Hyosung’s 300,000 tons/year factory in Vietnam stopped working due to technical problems.
– SC’s 400,000 ton 5 plants in Thailand are also scheduled for maintenance.
The maintenance season in the Asian PVC market will also start at the end of February and last until the end of April, and it is a big reason for the sharp increase in plastic resin prices.
3. Shipping prices soar
During the stressful Covid-19 pandemic, all transportation costs have increased. Shipping lines continuously announced to increase fees right in the crisis in many countries around the world. Specifically:
On 11/05/2021, European container carriers increased their prices worldwide.
03 of the world’s most significant container shipping lines notify customers of the rate increase at the end of May and the beginning of June 2021. The growth is about 400 to 800 USD/container.
The German shipping company announced a general increase in surcharges on routes from East Asia to the US and Canada. The increase from 15/05/2021.
Shipping line CMA CGM announced a new freight rate increase from mid-May 2021 on many routes from Somalia to Northern Europe, the Mediterranean, Black Sea, India, and Pakistan.
Shipping line MSC increased the new peak season surcharge from May 18, 2021, increasing $800/container.
Market prediction and solutions for plastic pellet manufacturers
The growth chart and the price of plastic resins in the fourth quarter of 2021 will undoubtedly increase and go up because the application demand for this industry is always urgent. Packaging plastic, household plastic, construction, PVC compound… will all increase sharply and need a significant source of plastic particles.
The high price of plastic resins affects both plastic resin manufacturers as well as consumers. However, due to the general situation of the world, businesses need to find their solutions to both ensure revenue and maintain the quality of plastic resin products supplied to the market.
From an expert’s perspective, the solution of using filler masterbatch in the production of plastic beads is currently considered the most effective for cost savings for suppliers. Mega Plast – a member of Nhat Huy Group – the leading manufacturer of plastic filler masterbatch in Vietnam, has maintained this essential product for more than 17 years and is still standing in the market and not too affected by market fluctuations 2021 analyzed above.
Mega Plast provides the most cost-effective solution and enhances the product’s surface properties, hardness, physical strength, and activity, enhancing the heat resistance advantage. Megaplast’s filler masterbatch will be added to polyolefin resin during molding, blowing film, injection molding, blow molding, extrusion to replace a part of plastic material in the product improve properties and save production costs export.
In addition, the strength of Megaplast of the Vietnamese market is the autonomy of input materials due to the support from member companies of the same Nhat Huy group, which has a long-term cooperation relationship with many shipping companies. Therefore, filler masterbatch products from Megaplast are available in many international markets such as India, Saudi Arabia, Pakistan, Poland, etc.
Referring to Megaplast’s factory and operating model and finding information about this unit’s Filler masterbatch product is a practical suggestion for an existential solution of plastic granule manufacturers or manufacturing enterprises plastic utensils in the context of fluctuations in 2021 as analyzed.
Explore Megaplast’s filler masterbatch products: HERE
For more information about Megaplast – a member of Nhat Huy Group: https://megaplast.com.vn/news/introduction/
For more information about Nhat Huy Group: https://nhathuygroup.com.vn/