Plastic Packaging – 2021 Price & Availability ImpactedAnna Lee
As a custom packaging supplier, one of the things that has made us successful is our ability to use a variety of materials to meet each customer’s needs. But, sitting here, in the new world normal of 2021, we’re seeing that breadth and depth of products from a more challenging perspective. Because, right now, we’re seeing a supply squeeze affect every single product that we offer. Beyond what we’ve been seeing in the lumber market (2020 Lumber Market and Q1/Q2 2021 Lumber Market), we are finding ourselves in a similar position with two other major packaging material categories – plastics and fiberboard.
Here, we’ll touch on plastics.
Chemical shortages started to affect plastic production starting back in late summer and early fall 2020. And the situation has since only gotten worse since. Walking into the end of Q1 2021, and coming off of a stretch of severe weather across the country that left US plastics (ethylene, HDPE, and PP, to name a few) production capacity shutdown from 70% up to 100%, plastics manufacturers and intermediaries are bracing for impact. In the wake this situation, many plastics industry suppliers are initiating force majeure policies and handing down more and significant price increases than what has been seen since summer.
And it’s not just tight supply that’s causing issues; demand continues to accelerate in tandem with a rise in manufacturing, construction, and consumer goods. Particularly in product categories tied to a change in purchasing choices in our new distanced, home-bound reality amidst the COViD-19 pandemic.
Then, let’s add a third factor to really stir things up – transportation. There is more product moving than vehicles and people available to handle the volume.
Plastic abounds across the packaging category. From bags and films, to sheet and corrugated boards, to resins used to produce cushioning foam and molded plastic shipping cases. As such, packaging as whole will be affected. Prices are heading up, and product availability and lead times will be impacted.
There’s conjecture that a correction to the current plastics situation will come once we get a few weeks away from the recent major winter weather. But, the trickle down affects will continue into the coming months. And, if we’ve learned anything from what we’ve seen on the lumber side (another benefit to our cross-commodity-capacity) – we’re not ready yet to make bets on what a return to normal or, at least, stable will look like.
To learn more about plastics and packaging, please contact our experts to discuss.