Plastic Corrugated Market and Pricing Update (Posted 7/1/2021)
As of July 2021, it appears that resin pricing for plastic corrugated has finally peaked.
After unprecedented price increases in plastic resin for the first half of 2021, it looks like the craziness has ended. With increases of over 25% since January in the cost of raw material for producing our plastic corrugated “resin” things are finally settling down. Although there are still shortages in plastic resins, and we are still experiencing increased lead times at least the prices have stopped climbing.
Covid-19 was to blame with over half the world’s refineries producing these resins shutting down for over 9 months. The refineries that were left open were running at dramatically reduced capacity. Most are at less than 50% of their normal output. This allowed Oil/Resin producers to charge higher prices with longer lead times and even restricted the volume that could be purchased to a percentage of past orders.
Plastic corrugated is still being affected by these shortages forcing finished product lead times at almost double pre-Covid times. This will take some time to fully recover. Best estimates are things should get closer to the norm as far as lead times by the end of the year.
Plastic corrugated pricing will hopefully start backsliding in the next few months as well but that will also be dependent on the refineries getting back online and their capacity coming back closer to the pre-Covid volumes they were at previously.
Also affected were secondary materials needed to produce many of the plastic corrugated products we provide our customers. Items like wire for our reinforcing totes or external parts for our PPS Pallet Packs with the extra components required for these products being in short supply. When available these outsourced products were also at higher than normal cost with extended lead times.
As with almost all industries plastic corrugated was hit hard by workforce issues. Many plastic corrugated manufacturers including ourselves were having to increase wages to try and retain existing employees as well as offer higher wages to new recruits to replace those workers that had left during the crisis.
All these issues from raw material increases and product shortages to increased labor costs increased costs for transit, and even workforce scheduling difficulties affect the finished product cost. As we put Covid further and further in our rear-view mirror most of these issues will begin to stabilize.
Plastic corrugated has a bright future as more and more companies are realizing the added benefits of returnable, reusable, and recyclable packaging.
In the long run, these challenges will make us all stronger in the end. We have been trying to provide our customers with the service they have come to expect and hope they understand the issues we have all faced during the trying times that Covid had created.
We continue to make investments in state-of-the-art equipment and increased capacity to better serve our current customers and the rapid increase of new customers understanding the benefits of transitioning to Plastic Corrugated.