Business Beat: Rexam Reports Reasons for High Plastic Prices
In its latest newsletter, Delivering Value, Kirk Rumsey, vice president of global commodities for Rexam Plastic Packaging, described how rising plastic prices—and plastic container prices—are being driven by a number of factors.
Regarding high-density polyethylene (HDPE), Rumsey stated that U.S. HDPE suppliers are being squeezed by the high cost of ethylene, but that demand isn’t strong enough to allow suppliers of HDPE to recover costs. Supply is shrinking, and in Europe, prices are rising due to tightening supply in the region. In Asia, prices are also holding at higher levels due to crude oil prices about $100 per barrel, he said.
High polypropylene prices are being driven by the high price of crude oil. Natural gas has become the best option for making polypropylene right now, and as a result, less polypropylene monomer is available. Weakened supply of polypropylene monomer is driving up propylene prices. “Polypropylene resin suppliers will seek to capture these cost increases,” said Rumsey, “but demand may not be strong enough to allow it.”
“While there are no indications that upward pricing pressures will ease significantly,” he said, “Rexam will continue to offer solutions that add value to our products.