By Shell Polymers on Jul 12, 2021
Supply chain disruptions happen. One of the most common reasons is due to weather issues affecting the many plants in the southern region of the US. Weather delays can cause a ripple effect on supply chains, that may impact rail routes and cause congestion that forces converters to send trucks hundreds of miles away to get contracted resin supply. This long trip not only costs converters unplanned expenses but it also can delay their production, which further deducts from the bottom line.
Shell Polymers spent over 1,000 hours interviewing converters to gain an in-depth understanding of common challenges so we could address them in the design of our new plant and business. As a result, our plant and supply chain operations are specifically-designed to help converters maintain the same buying all year so customers don’t have to worry about their resin supply during the winter or hurricane seasons.
Thrive Through Uncertainty With Shell Polymers
Historically, hurricane season causes rail delays from the Gulf Coast that could impact the polyethylene market. Possible delays such as these may leave producers reliant on supply already in SIT yards to fulfill contractual obligations. With our SIT yard strategically located outside of Pittsburgh, we are uniquely situated to respond to our customer’s needs. This also means converters don't have to worry about storing resin for adverse events, which helps them keep more capital available for growing their business.
Having both truck and rail, or multi-modal, transport options is another way to give customers supply security because we have multiple options for when customers need it. Multi-modal transportation provides various reliability, capacity, and safety advantages because converters benefit from more equipment and standardized schedules.1 Shell Polymers’ real-time tracking capabilities allow us to proactively address transit problems and send trucks to fix or take over for malfunctioning rail cars, and vice versa.
Reliability and availability are essential to customer satisfaction and competitiveness, which is why we've introduced a predictive maintenance program. This will combine embedded sensors, analytic models, and artificial intelligence to help avert trips and failures in critical equipment. These sensors will track key variables such as temperature, pressure and vibration. Plus, the artificial intelligence algorithms will learn to identify when issues are developing. This helps us be proactive in fulfilling converter orders and delivering on-time.2 That's why Shell Polymers implemented advanced technologies that deliver value to converters by optimizing supply chain operations and improving polyethylene (PE) supply reliability. This ultimately results in high-quality resin for converters to confidently mold into high-quality products.
Proactive Suppliers Help Converters Navigate Market Challenges
With hurricane season fast approaching, converters are frequently forced to change their buying patterns and incur extra inventory cost or pay a premium to prepare for weather events. Based on the economic impact of the global pandemic and other events in 2020 and 2021, this means that converters can end up buying resin at 3x the price.
It’s common knowledge that resin prices can change based on factors such as:
- economic conditions
- weather impacts on feedstock, supply chains, and resin production plants
- demand for end use products
- unplanned production delays
While fluctuations in resin prices aren’t necessarily a foreign concept to converters, this year has been exceptionally difficult. Plastics News reports never-before-seen high resin prices across raw materials including polyethylene, polystyrene, polypropylene, and polyvinyl chloride. These numbers are continuing to climb as demand skyrockets while resin producers struggle to recover from Winter Storm Uri. For example, in the PE market, LLDPE and LDPE prices are now up a total of 33 cents so far in 2021 and are up 54 cents since January 2020.3 Similarly, HDPE prices are up 31 cents in 2021 and 51 cents since January 2020.4 With the last 365+ days being a rollercoaster across many industries, it’s no surprise that resin prices have been on a similarly bumpy ride.
In an April 2021 report from Plastics News, Mike Burns, a PE market analyst with Resin Technology Inc., said that allocations are moving higher than 70 percent, but that demand is still exceeding supply.5 Keeping an eye on the industry is critical for converters to accurately forecast resin needs and manage operations. To address this need and help converters make better decisions, we assembled a team of in-house market analysts who proactively monitor the industry and relevant market forces impacting supply.
As a greenfield organization, we strategically built our teams and polyethylene plant to be your long-term polyethylene supplier. By proactively staying ahead of unplanned circumstances and market shifts, we put in the work to ensure you have confidence in your PE supply.