Plastic Packaging Costs To Increase In 2021: Here Is Why
If you have been tasked with buying shrink film for your company, chances are, you have noticed that prices for many films and plastic packaging materials have been slowly creeping up since at least September of last year. You may have also noticed that any resin-based plastic packaging supplies are also increasing in price as time goes on.
You are probably wondering, what is the cause of these price increases? When can we expect them to stop? Should I stock up on supplies now to save money in the long run?
These are but a few of the questions we have been getting from our customers, and we expect to continue receiving such inquiries. To provide some knowledge and peace of mind, we have put this article together to help you better understand what is going on.
It is Industrial Packaging's stance that being open and forthright with this information is necessary because it impacts our customers. We believe that we have a requirement to be upfront with any type of news like this in order to maintain the trust we've built with our customers.
With the rise of global supply chain disruptions due to customer demand, the plastic resin market is preparing for multiple cost increases as we head into March. Additional price increases for various resin-based plastic packaging supplies are expected to occur over the next few months.
This article will provide some insight into the events that have led to these materials' increased prices.
What Are The Expected Price Increases For Shrink Film And Plastic Packaging Supplies?
Due to the rise in costs in the resin market, many manufacturers will be making a 3-12.5% price increase within the next month.
As such, prices will be going up for shrink film and other resin-based plastic flexible packaging supplies during this time. Further increases may also occur over the next several months.
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Why Is The Cost Of Plastic Packaging Going Up?
These increases in the cost of resin-based plastic packaging supplies are due to several factors.
There have been multiple supply-chain disruptions (for example, extreme weather patterns) over the past few months, partly due to increased demand for these supplies. The global pandemic has also put excessive pressure on various elements of the packaging industry, which has compounded these issues.
Additionally, there have been cost increases for logistics and feed-stock requirements and continually increasing demand for plastic packaging products the world over. Feed-stock is the raw materials required to supply or fuel machinery or industrial processes.
With the demand for plastics worldwide continuing to increase with inventory levels being tight in many of the global resin markets, one thing is for sure.
Planned and unplanned shutdowns are contributing to tight inventory levels. In light of this, prices are expected to continue to rise.
The Bottom Line
"Prices are pushing higher, aided in part by improving demand. Through the end of summer, suppliers will have the upper hand in negotiations before leverage swings back more to a neutral position in the fourth quarter. With North American natural gas prices remaining low coupled with extreme uncertainties remaining with overall economic activity, buyers are likely to regain some leverage in the fall."
The recent extreme weather conditions from the polar vortex have been affecting Texas and Louisiana, a geographical area that was recently struck by hurricanes last fall.
These locations are not well suited to managing such extreme weather, particularity the bitter cold. Various elements of the plastic resin industry in these areas (such as refineries and pipelines) may continue to be disrupted due to these weather events.
These events may lead to more unexpected shutdowns. With the demand for resin already being very tight, the resin market cannot handle any more significant supply shortages. Additional disruptions may lead to more severe price increases.
What Should You Do In Response To These Price Increases?
With multiple price increases coming down the line in the resin market, you can expect the prices of resin-based plastic packaging supplies to increase as well.
You may want to consider stocking up on these supplies to avoid paying higher prices as the items' cost continues to increase. We would advise you to check your inventory and get your orders in before the price increases, if possible.
It should be noted; we are experiencing longer lead times and trucking delays. With this information in mind, you will want to consider placing your materials orders with your chosen vendor as soon as possible. This will help you to avoid paying more for your supplies.
If you would like to speak with a packaging professional regarding these price increases and discuss potential materials orders, please contact us. Even if you're not interested in placing an order, we're here to help equip you for price increases and guide your business to operate in the most efficient way possible.
About Nathan Dube
As the Digital Marketing Specialist at Industrial Packaging, I am honored to create content for such a phenomenal company and work with one of the greatest teams in the Packaging Industry. Whether creating a video, writing blog posts or generating other pieces of content and multimedia, I am always excited to help educate and inspire our prospects and clients to reach their highest potential in regards to their packaging processes and needs.