Caution: Rising prices on all sides

Price increase announcements over the last six months have touched almost every type of raw material that goes into finished plastic product: resins (from polypropylene to acetals), additives, and colorants. Coupled with a spate of commodity resin price increases in the first quarter of this year, processors and distributors are starting to feel the pinch.

“This time [the resin increases] are more unanimous than they have been in the past,” says one Toronto-area custom molder. “We’re getting no guarantees on pricing — even for tomorrow.”

The molder notes that all the markets he serves are affected because of the broad range of resins subjected to rising prices.

“First it was the commodity grades, polyethylene, polypropylene and styrene; now it’s even ABS and polycarbonate.”

The reasons for these increases in resins and additives are varied, ranging from rising feedstock costs, to tight supply, to construction projects in China gobbling up supply, to uncertainty over a possible war.

Another common reason is that put forward by Great Lakes Chemical, explaining its increase in antioxidant pricing: “Over the past several years, pricing for hindered phenolic antioxidants has declined to a level that is no longer sustainable….this price increase is a needed step toward ensuring that the required level of customer support, investment in productivity improvements, and security of supply are in place as healthy growth returns to global markets.”

Similarly, just a few weeks ago, BASF Corp. cut back its polystyrene production because profit margins in this segment are simply not sustainable.

While small price increases can be absorbed by distributors and processors, the general sentiment now is that the weight of these cumulative increases will have to be passed through to the clients.