Since last September, the prices of plastic packaging materials has gradually increased. The slight and sustained price increase has affected all plastic packaging materials, including resin-based plastic packaging and shrink plastic films. The price changes might have piqued the interest of many customers, with some wondering how the situation will pan out in the future. At Industrial Packaging, we believe in being straightforward with our clients on such critical issues. We anticipate that the price shifts will continue well into 2021. This article sheds light on these price changes and offers advice on how to respond.
By last October, manufacturers were expected to increase the rice of resin-based plastics and other related supplies by 3-12.5%. The changes in the resin market will inform this decision. Such price adjustments are expected to continue well beyond October 2020.
What are the drivers of price increment for plastic packaging and supplies?
A complex mixture of market forces drives the price increase currently being experienced in the resin market. One of the leading causes of the price increase is the disturbances in the resin market supply chain. The resin market has been adversely affected by the ravaging coronavirus pandemic and extreme weather conditions. These factors have driven up demand for plastic packaging while putting a strain on the supply chain. Growing demand and declining supply usually drive up prices.
Over the past months, the industry has also witnessed a steady increase in the cost of raw materials globally. The materials needed to manufacture, transport, and transport resin-based plastic packaging has increased. The price of fuel used in industrial machines and processes has also gone up. The logistical challenges have further compounded the situation. The logistics cost associated with manufacturing and supplying plastic packaging products has also risen over the past few months.
With economies around the globe still battling restrictions to contain the pandemic, plastic packaging products inventories will continue to dwindle. We expect the inventory challenges and growing demand to continue pushing the prices higher and hold steady up to the summer of 2021. The anticipated weather changes, improving economic activities, and declining gas prices will likely improve supply and decrease prices in the coming months.
How do you respond to these price changes and the resin market situation?
The difficulties in the production of plastic packaging will also affect the prices of other related supplies. This trend is anticipated to hold steady for several months. The best move right now is to increase your inventory levels for these supplies to cushion against paying even higher prices in the coming months. Therefore, countercheck your inventory and stock up if you have the funds.
Moreover, the industry’s supply chain has been disrupted by lockdowns due to the pandemic and bad weather. These logistical challenges translate to delays in deliveries for ordered products and raw materials. Trucking and delivery delays mean more money paid for logistics. Avoid passing down these additional costs to your customers by placing your orders well in advance. Such a proactive approach is the key to cost reduction and stabilization for these plastic packaging products and supplies.
Bottom Line
The price of plastic packaging products and resin-based plastic packaging materials is expected to rise. The global pandemic and extreme weather conditions have disrupted the entire supply chain and manufacturing processes. A packaging professional can help you understand these market shifts and steers towards the right direction in making informed ordering decisions. Speak to us, and we will walk with you throughout this journey.
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