What Affects Polyethylene Pricing?
Four main factors can affect the price of polyethylene throughout the year: the price of the raw materials, fluctuating demand, producer inventory, and manufacturing delays or interruptions.
- Price of Raw Materials: When crude oil, additives, or other materials used to make polyethylene resin become more or less available, the cost of producing the resin goes up. To cover potential losses, manufacturers make up the difference by purchasing raw materials at a higher price, then recovering the cost from consumers.
- Demand for Polyethylene: The demand for polyethylene and products made from it can increase or reduce demand locally, nationally and internationally. For example, a push for plastic alternatives may reduce demand for polyethylene, while a greater need for single-use packaging for sanitation reasons could mean a significant demand for polyethylene. Polyethylene prices will increase significantly if there’s a high demand, and prices may be especially high if there’s also a low supply.
- Polyethylene Producer Inventory: Similar to demand, the supply of polyethylene available will affect its market rate. If there’s a surplus of polyethylene at the end of the year, producers may offer their product at a discount to reduce inventory in the new year. Similarly, a low supply may cause demand to be higher, increasing polyethylene prices for manufacturers and consumers.
- Manufacturer Delay or Interruption: Interruptions in the production, transportation, or manufacturing of polyethylene and polyethylene products could cause supply and demand consequences that raise prices. If production of polyethylene resin shut down for any reason or weather delays a shipment of materials, the price of polyethylene may go up suddenly.
Although some of these factors are difficult to predict, some polyethylene price trends can be anticipated by manufacturers and consumers, allowing them to order polyethylene at the right time, at the right price.
Understanding Polyethylene Price Trends
Significant events may affect many factors at once, leading to an upward or downward trend in polyethylene prices. Two examples are:
- Global Pandemic: An international health emergency increases demand for single-use plastics and polyethylene products. As demand goes up, supply may go down as producers race to fill orders and secure the materials they need. This could lead to a significant increase in prices for manufacturers and consumers.
- Sustainability Trend: A government push toward renewable resources may limit supply or add costs to purchasing materials such as polyethylene. Polyethylene prices may go up to make up for added production costs, or down to sell off a large inventory.
What Fluctuations in Polyethylene Prices Mean for You
If you’re at the mercy of fluctuating polyethylene prices, you might not be able to keep up with the constantly changing factors of the industry. It can be a headache to follow trends and know when and how much to buy to keep costs stable for you and your customers.
Fortunately, if prices are up for now, chances are they’ll come back down again. Manufacturers of polyethylene products are likely working hard to secure the best value for their customers and be transparent about costs and where they come from.
As customers, your investment in the partnership with your polyethylene supplier is what provides the greatest return — you trust them to supply quality products at the best price they can, and together you weather the fluctuations of polyethylene pricing.
A-Pac manufacturing is here to help supply the intelligent packaging solutions you need, with transparent prices for custom poly bags. Ready to talk about pricing? Give our team a call today.