The price of materials can change constantly, regardless of industry. This is no exception for resin and plastics, the cost of which can fluctuate multiple times in just one day. Price volatility can significantly impact your business, and understanding the factors that impact resin pricing can help you more nimbly anticipate how market changes might impact your company.
Staying up to date on recent events and industry news surrounding plastics is key to making informed business and purchasing decisions, so let’s look into just a few of the many factors you should know about that can impact resin costs.
4 Factors that Influence the Price of Resin
#1: Natural disasters
Resins are a byproduct of petroleum refining. That production process is based in facilities along the U.S. Gulf Coast, a hotspot for hurricanes and severe weather. Hurricanes and other large storms along the Gulf of Mexico can cause oil refineries to shut down or lead to shipping and logistics delays when it comes to resin production. Most recently, cold weather on the Gulf Coast forced preemptive shutdowns of petroleum facilities, leading to spikes in raw material costs.
#2: Supply and Demand
Low resin supply typically means high demand and higher prices. Alternatively, a higher resin supply usually means more buyers can get the resin they need at a lower price. In that instance, supply and demand are regulated by production and the amount of resin available at a given time. Sometimes, though, industry trends can create demand. Examples of this include flexible food packaging, ready-to-eat meals, and frozen foods, which means steadily increasing demand for resin supply in the long term.
#3: Production
Crude oils and natural gasses are market fundamentals impacted by their country and their company’s drilling rights, physical extraction, and refining process. These also play a large part in the raw materials and energy costs required to produce resin. In this way, the costs, supply, and demand of crude oils and natural gasses are directly related to resin’s cost, supply, and demand. If disruptions occur in the oil and natural gas markets, then disruptions are likely to also occur in the plastics markets as well.
#4: Exporting
We saw an extreme example of the ripple effect of exporting and logistics issues during COVID-19. In some ways, we’re still rebounding from those disruptions that occurred in 2020. Since plastics are a global industry, it is no exception to that same ripple effect on an international scale. Over the last year, US resin exports saw a decline along with an overall slowing in US manufacturing activity. The upside of this, however, is that it made room for a greater balance in domestic resin and plastics trading. A healthier US plastics trading market bodes well for US resin manufacturers in the coming year.
These are just four of the many, many external influences that can cause the price of resin to rise or fall. Forces like politics at home, wars overseas, international relations, climate change, the push for clean energy, and supply chain disruptions are all examples of external influences that hold sway over the plastics industry and the cost of materials.
What is the Current State of the Plastics Market?
Currently, the demand for resin is low and has had a slow start to the year overall. Due to elevated consumer spending in the US over the last year, industry experts anticipate a jump in resin costs in 2024 should these pressures remain consistent. Advancements in the packaging industry, such as foaming technology, big data, and IoT integration, are expected to project long-term growth for 2024, 2025, and beyond. Similar innovations such as resealable packs, easy-open mechanisms, and stand-up pouches face increasing consumer demand across various sectors, including industrial packaging, automotive, and construction. In light of global sustainability initiatives, the emergence of eco-friendly biodegradable plastics is yet another industry anticipated to steer the course of the resins market. With so many avenues for growth, the resins market outlook for the future is robust.
Working with suppliers you can count on can make all the difference in an unpredictable market. We at A-Pac Manufacturing feel it’s always better to see how things shake out over the course of a few months before making any decisions about changing our pricing. As a small custom manufacturer, we’re proud to deliver some of the shortest lead times in the industry. We’re much more nimble than massive corporations, and it is easier for us to adjust our course and stay flexible in the face of the many external factors that impact the ever-evolving resin and plastics industries.
At A-Pac, we’re able to manufacture the custom bags you need according to your schedule at no minimum order. For the bags you want, when you want them, give the A-Pac Manufacturing team a call. Thank you for your continued business, and we look forward to serving you.