Discussion Highlights: Mitigating Resin Price Increases

12.22 Executive Roundtable

Two executive roundtables focusing on plans to reverse resin price increases were conducted. APD shared recent information on resin pricing, with many grades showing lower spot prices in the past 3 months, although all grades discussed still have higher prices than pre-covid levels.

Highlights of the roundtable discussion are summarized below:

• Global Commodity Director for a CNC machine manufacturer shared that resin prices are still elevated, and no suppliers have come to them with price decreases. They hold quarterly meetings with their top 10 resins spend suppliers to discuss costs and the impacts of commodity indexes and foreign exchange. They buy resins in China and manage quality assurance by doing a melt test with every lot.

• Global Category Manager for a manufacturer of truck bodies and trailers shared that they are starting to get suppliers to walk back price increases, and they are pushing suppliers to recover more price increases. They use index-based price agreements and hedge with banks for major material purchases. They also shared that they focus on long-term supply agreements and don’t leverage resourcing to negotiate better pricing but do market test resins to ensure they have a good benchmark.

• Resins Buyer for a heavy vehicle HVAC manufacturer shared that they are still seeing allocations and increased lead time for Acudel and ABS. They have seen reduced costs for plastic components but not for resins.

• Global Purchasing Director for an automotive supplier shared that they buy resins for automotive interiors, but most are directed by their customers or have index-based pricing agreements. Where they are exposed is in the material content of purchased plastic components – they have been relatively successful minimizing resin price increases by following a standard playbook to delay supplier price increases. They have seen softening in PP prices and expect to see further declines with added PP capacity in North America.

• Purchasing Director for a manufacturer of chrome plated plastic parts for automotive and commercial truck sectors shared that most of their spend id directed by customers or they have index-based pricing agreements. They have experienced recent price decreases for ABS and ASA materials.

• Strategic Sourcing Manager for an automotive wiring and connector manufacturer shared that they do not use index-based pricing agreements with resin suppliers, but rather rely on their global footprint to leverage local price advantages. For example, they have found that PBT prices decreased in Asia before North America, primarily due to feedstock price movements. They also shared that they are making headway on price reductions with other resin grades and suppliers are saying that demand is decreasing.

• Global Purchasing Director for an automotive supplier shared that they are taking advantage of a stronger USD (relative to the EURO) to negotiate better resin pricing (they had traditionally negotiated in EUROs). They are also working to align currency reference in customer and supplier contracts.