Unique Opportunity for Plastics Manufacturers to Lock In Favorable Resins Pricing

ByDebbie

North American resin prices continue to be extremely dynamic, offering manufacturers of plastics products a unique opportunity to lock in long-term agreements with favorable pricing.  Demand for resins will begin to rebound as key industries scale back up, and historically low oil prices are already beginning to trend upwards.

Most North American resins saw price declines in April (“COVID-19 drives commodity resin prices down in April”, Frank Esposito, Plastics News, published May 15, 2020).  The effects were primarily driven by reduced demand for plastics as the automotive and construction industries were considerably slowed.  Historically low oil prices impacted pricing as well – West Texas Intermediate (WTI) crude has fallen 60% since the start of the year.

Screen Shot 2020-05-28 at 11.19.38 AM
Adapted from Plastics News – May 15, 2020

Going forward, resin prices will likely bounce back up as producers idle plants to balance supply with demand and oil prices trend upward.  One example is Dow’s decision to idle three PE plants, representing approximately 10% of their global PET capacity, as well as two elastomer plants.  In addition, export sales to Asia are depleting North American stocks – for example, nearly two billion pounds of PE were exported to Asia in April (“Weekly Resins Report: Trading Activity Picks Up, as Manufacturers Begin to Reopen”, Plastics Today, published May 19, 2020).

Oil prices appear to have bottomed out in April.   After having dropped dramatically  in both March and April, oil price futures are expected to steadily increase, with August WTI futures already trading near the level of March pricing.

Click here to contact APD to lock in savings on your resins spend.

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