85 years of packaging solutions - since 1937
85 years of packaging solutions - since 1937

Commodity Plastics Prices Soaring – Here’s Why They’re High

commodity plastics 1

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Over the past few years, plastic has become something of a pantomime villain. The word stirs visions of landfill sites, marine blockages and other pressing environmental issues. The reality is that plastic performs an essential role in modern life, with plastic packaging garnering the following benefits:

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Protection

Protects vulnerable products from damage whilst in transit. It also acts as a protectant from contamination or damage by moisture, humidity, gases, microorganisms, insects and light.

Preservation

Plastic packaging allows items to be contained in transit, meaning products are able to last longer. This vastly reduces wastage which in itself is a greater environmental deterrent.

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Transportation

Allows transport over great distances, so that we have access to a wide variety of non-local produce that, in turn, encourages trade. It also saves space through stacking objects, which make transporting more efficient.

Plastics are a global commodity that isn’t going away. Allied Market Research projects that the market will reach $858.4 billion by 2030, growing at a CAGR of 6.3% from 2021 to 2030.

The packaging industry holds majority market share of the commodity plastic market in 2020, owing to rising demand due to its durability, low cost, and high recyclability. 

This is expected to increase by 2030, with the rises in the number of commodity plastics also being forecasted in the construction, consumer goods and automotive industries.

There are seven core types of commodity plastics:

  • Polyethylene (PE)
  • Polypropylene (PP)
  • Polyvinyl Chloride (PVC)
  • Polyethylene Terephthalate (PET)
  • Polystyrene (PS)
  • Poly Methyl Methacrylate (PMMA)
  • Acrylonitrile Butadiene Styrene (ABS)

*WARNING: If you say that last one too quickly then your computer will start levitating.

The three commodity plastics that we operate with as a business are Polyethylene (LDPE)  for our stretch wrapping material, Polypropylene (PP) and Polyethylene Terephthalate (PET) – aka Polyester – for our strapping products.

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Polypropylene

 

Good elasticity

Efficient seal joints

Non-corrosive

Versatile and cost-effective

Flexible and gentle – won’t damage the products

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Polyester

Can be subjected to higher tensioning force than PP Strapping

Doesn’t stretch or lose tension under load

Doesn’t degrade under sunlight unlike PP

Safer to use than steel – no sharp edges

Corrosion-resistant

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Low-Density Polyethylene

Flexible with a low tensile strength

Moisture resistant

Durable through high impact resistance

Retains shape even in extreme temperatures

Cost effective

All of our products are 100% recyclable.

For our polyester strapping (PET), it is made of 100% recycled material and can continue to be recycled as many times as it is collected through the waste stream.

Our polypropylene (PP) strap is currently made from 100% virgin polymer and we are successfully moving all of our standard SKU’s to 30% recycled content which complies with new UK Gov plastic packaging tax regulation. Check out our blog for more information on this.

We’re proud of our ability to adhere to environmental regulations and place great importance on running our business with eco-sustainability in mind.

 Additionally, we’ve achieved “zero” to landfill for all of our activity through our Basingstoke operation for the last two years, and we aim to continue to achieve this standard ongoing.

The Rising Cost of Plastic

Plastic polymers are a fundamental element for much of global manufacturing, but over the past year, and particularly in recent months, the cost of all virgin polymers has increased dramatically

First, oil prices soared; and then other factors like increased energy costs, plus shortages of raw materials all contrived together to create record high market price levels for most polymers, this contagion has also affected recycled grades (RPET) as well.

Below we focus on our two strapping raw materials – polypropylene and polyester.

Polypropylene and Polyester (RPET) raw material prices are shown in the graphs below.

PP Price Increase

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PET Price Increase

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What’s Caused These Rises?

You won’t be surprised to see the usual candidates for what’s causing the current hardships in commodity plastics:

Rising Energy Costs – the sudden and abrupt increases in natural gas and electricity prices has caused strain on production costs.

Russian war – the global escalation in the price of crude oil and derivatives, intensified by the needless suffering of the Ukraine war, has caused significant impacts.

Supply shortages – whilst not as prevalent as late 2021, we’re still feeling some hangover from the global pandemic with bottlenecks persisting and leading to increased prices across the board.

Opportunistic producers – the industry shortcomings outlined above have caused many producers to set prices well beyond the means of justification which are passed along the supply chain.

Where Next?

Well, the good news is that commodity plastics is a cyclical market so we should hopefully have seen the worst of it. 

However, it’s dangerous to make any major market predictions as we have seen with the crazy uncertainty of the last few years. We’re confident we’ve seen the peak of these price rises, but we’ll be cautious and vigilant moving forward.

What Does This Mean For Our Customers?

We like to be honest at Gordian and the truth of the matter is that it’s been a difficult time for us and our customers as a result of these price increases. However, we are pushing hard every day to negotiate the best deal for our consumables and ensure as little cost is transferred onto our customers as possible.

In return, we ask for your patience and understanding that this is a problem that’s out of our hands. Every major player in the market is unfortunately in the same boat and, like everyone else in the UK, we stand with Ukraine and hope the situation is resolved as soon as possible. 

For more information on our packaging solutions, feel free to get in touch with us today.

"As the largest distributor of plastic strapping products in the UK, we at Gordian Strapping totally understand the difficulties the that our customers are facing in dealing with the extraordinary rise in polymer pricing. Due to the additional impact of increases caused by significantly higher energy, labour and distribution costs, the market is also still affected by extended manufacturing lead times - making it challenging for Gordian to maintain stockholdings at required levels. However, we are meeting that challenge, and remain committed to maintaining stock levels in line with our customers demand. We will monitor raw material pricing constantly and will be pushing hard to gain price reductions as soon as we see pricing start to fall."
commodity plastics
Andrew Lea
Managing Director

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