Major Packnet suppliers of plastic materials have announced yet another price increase effective in April. There have already been multiple price increases passed onto us since last December. The main driver is the cost of polyethylene resin which has been in short supply over the last 5 months. The most recent price increases have been from our extruded polyethylene foam suppliers, but the core material resin is in many of our plastic products including corrugated plastic panels and various plastic foams that Packnet uses in its custom packaging products.
The shortages started back in November of 2012 where an increase in demand from China combined with extended downtime in a US processing plant caused a significant shortage of this resin that affected prices and availability on virtually every type of plastic product. This issue is further compounded by some historically high oil prices that are driving up raw materials.
While over the long term, Packnet is hopeful that the supply situation improves, we are getting very little visibility from our suppliers on these price increases. We are evaluating our pricing on a case by case basis depending on the combinations of materials used in our packaging solutions.