If this sounds familiar, it should It doesn’t mark the first time this year that film manufacturers have raised price (as we spoke about in May – As Film Extruders Try To Stretch Margins, Are They Looking In The Right Place?), and isn’t a move that is taken lightly or without consideration for others in the supply chain.
When resin manufacturers raise prices (as Dow, Nova, Lyondell Bassell and Chevron Phillips achieved through unplanned plant downtimes), the ripple effect races to distributors, converters, OEM’s, and ultimately the consumer. When any of these components fail to achieve margin-regaining price increases, the supply chain is made less healthy and more susceptible to failure.
For some application spaces, polyethylene remains the unparalleled solution which cannot be sidestepped. Every player in the supply chain must continue this battle for profitability. For most applications, there may be other options available for either adding value or subtracting costs.
One interesting strategy we’ve seen is the diversification of the supply chain to offset the volatility of petrochemicals including PE film. By sourcing biobased resins and additive systems to service multiple products, OEMs can deliver a sound, sustainable product that frees them of sole reliance on synthetic derivatives. As manufacturers of bioplastics and bioadditve systems become more sophisticated, so to do the gaps in performance and pricing becomes more stable.