Instability has marked polyethylene (PE) resin pricing since the COVID-19 pandemic began in 2020, with costs soaring along with demand. That came amid disruptions in both resin supply and how resins are sold, with auction pricing kicking in due to limited supply and final prices not always locking in until shipment. Shortages and raw material price increases created challenges for converters and end-users alike in meeting demand.
A mix of strong demand and unpredictable supply kept prices trending upward. COVID-19 was one of the most significant disruptions to ever hit global supply chains, worsening more typical troubles like tropical storms and regulations.1 Meanwhile, the pandemic greatly boosted demand for hygienic plastic products, packaging, and personal protective equipment (PPEs) wanted by safety-conscious consumers. It also took slack from the industry needed to manage other extreme events, like a 2021 winter storm in Texas that resulted in decreased capacity.
That, combined with the COVID-19 outbreak, created never-before-seen industry conditions. In late February 2021, as much as 85 percent of resin capacity was down. The downtime and other disruptions caused resin prices to rise frequently.2 Meanwhile, PE imports to make up the difference are limited by shipping delays and sky-high shipping rates, with many purchasers waiting to see if deliveries improve and/or better local availability grows.3 Some converters sought other materials to fill the PE gap but many other raw materials were in short supply.4
LLDPE is popular for its strength, impact and puncture resistance, and cost, making it a foundational element for uses in homes, parks, and businesses.
A critical component of both flexible and rigid packaging, as well as plastic products such as buckets and pipes, HDPE plastic is a building block for innovation.
Shell Polymers is disrupting the polymer industry by building a polyethylene plant from the ground up in Monaca, PA that will supply HDPE and LLDPE resin.
While resin production started rebounding, challenges piled up. Converters are being hit with a one-two punch of historically high and unstable pricing.
Despite pricing challenges, plastics demand continues growing. The Plastics Industry Association (PLASTICS) forecasts manufacturing to increase by 5% in 2021, with plastics machinery and production molds growing by 12.6% and 4.6%, respectively, during the year. And the production of plastic materials and resins is expected to jump 8.2% in 2022.5
According to PLASTICS, higher resin prices amid ongoing scarcity and strong demand were expected to last into 2022, with slowing price hike rates as the only relief. Year-to-year increases peaking at almost 26% in 2021 are expected to fall to around 2.5% in early 2022.6
The COVID-19 pandemic magnified changes already happening in industry and society, creating new opportunities for informed plastics converters. Get a better sense of the trends and topics of 2021 and beyond with our Polymer Trends Report.
Meet Supply Coordinator Rosalinda Brinkmeyer. Rosalinda and the Polymers team organize all their plans and operations around the goal of providing exceptional customer satisfaction. She manages inventory at terminals and warehouses and creates purchase orders based on the forecasts for each month. She also works closely with supply managers to ensure inventory is being managed accordingly by utilizing supply chain planning tools.
Coming out of a tumultuous 2020, polyethylene suppliers near the Gulf Coast found themselves facing a rare occurrence – winter storm warnings. In a matter of days, record-low temperatures resulted in lost power, frozen water pipes, and an array of snow-and-ice-related damage across Texas.
1 https://www.weforum.org/agenda/2021/03/covid-19-pandemic-impact-global-supply-chain/
2 https://www.iapd.org/IAPD/Publications/Blog/Blog_Articles/2021/Feb_March/Resin_Supply_and_Pricing_Volatility.aspx
3 https://www.theplasticsexchange.com/research/weeklyreview.aspx
4 https://www.plasticstoday.com/automotive-and-mobility/running-resin-shortages-here-are-five-plastic-alternatives-consider-when
5 https://www.plasticstoday.com/industry-trends/report-forecasts-robust-growth-plastics-industry
6 https://www.plasticstoday.com/industry-trends/report-forecasts-robust-growth-plastics-industry
