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    What Factors Impact the Price of Plastic Resin?

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Industry Articles

What Factors Impact the Price of Plastic Resin?

The world of plastic manufacturing is complex and multifaceted, with pricing being a particularly intricate aspect to navigate. The cost of plastic resin, a crucial component in the production of various plastic products, is subject to fluctuations influenced by numerous factors. In this comprehensive exploration, we'll delve into the elements that play pivotal roles in determining resin pricing.Upstream Assets and Feedstocks At the very beginning of the resin production chain lie upstream assets and feedstocks. The availability and cost of crude oils, natural gases, and additives are fundamental in shaping the types of resins produced. These materials are not only pivotal in the manufacturing process but also in determining the final cost of resins. Market restrictions and economic factors surrounding these feedstocks can lead to escalated costs, directly impacting resin pricing. Inventory Levels The supply-demand equation is a classic economic principle that holds true for plastic resins as well. Inventory levels in the market can significantly sway prices. An excess supply often results in discounted prices as manufacturers aim to reduce inventory costs. Conversely, a scarcity in supply can trigger high demand, leading to a surge in prices. Industry Trends The ebb and flow of industry trends also dictate resin pricing. For instance, shifts in demand for specific types of plastics used in packaging or construction can either bolster or depress prices. Keeping a pulse on these trends is essential for businesses looking to make strategic purchasing decisions. Labor and Production Capacity The human element, labor, alongside production capacity, also influences resin costs. Unforeseen shutdowns or maintenance activities can curtail production capacity, leading to price hikes due to reduced supply. Capacity Adjustments Similarly, adjustments made to production capacity-whether planned or due to unforeseen circumstances-can have a profound impact on resin prices. These adjustments can either alleviate or exacerbate supply constraints, thus affecting pricing. Policies and Geo-political Events Lastly, the broader context in which resin production operates cannot be ignored. Regulatory policies and geopolitical events can have far-reaching effects on the cost of feedstocks and the operational dynamics of resin production facilities. These factors collectively contribute to the fluctuating nature of resin prices. Understanding these determinants is crucial for businesses as they navigate through the dynamic market environment. By staying informed about these factors, companies can make more calculated purchasing decisions, ensuring better financial stability and market competitiveness. How are chart values determined at The Plastics Exchange? For the daily charts, we capture the asking price at the close of each day. The weekly charts use the Friday close, and the monthly charts capture each end of the month quote.

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INEOS Takes Major Step Forward with Acquisition of TotalEnergies Petrochemical Stake

INEOS is set to enhance its Petrochemical portfolio by acquiring TotalEnergies 50% interest in several joint ventures, including Naphtachimie, Gexaro, Appryl, and 3TC. Naphtachimie, one of the largest steam crackers in Europe, with an annual Ethylene capacity of 1.6 billion lbs. Meanwhile, Gexaro and Appryl, specializing in Aromatics and Polypropylene have annual capacities of 600 million lbs and 660 million lbs respectively. This strategic move will lead to the comprehensive integration of the aforementioned petrochemical entities into INEOS Olefins & Polymers South, located in Lavera, France. Notably, Petroineos will continue to operate Gexaro, situated on the Lavera refinery site. Xavi Cros, the CEO of INEOS Olefins & Polymers South, views this acquisition as a significant leap forward for INEOS' operations in France and South Europe. The move is expected to bolster their competitive edge and pave the way for further investments, including those aimed at CO2 reduction to fulfill their net zero 2050 pledge. Additionally, INEOS will take over the southern sections of TotalEnergies ethylene pipeline network stretching from Lavéra to the Lyon region in France. Both companies will jointly hold the central and northern sections extending from the Lyon region to the Lorraine region in France. The finalization of the deal, subject to consultation and regulatory approval, is anticipated by the end of 2023.

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Sustainability Goals vs Market Realities: The Challenges Faced by Plastic Recyclers

The North American plastics recycling industry is feeling the heat as prices for offgrade virgin resins take a downward turn. The increase in production capacity, coupled with a slowing economy that is reducing demand, has led to a drop in prices for many virgin resins. Further, reduced operating rates at resin producers generates a larger percentage of offgrade / transitional material which adds to the pricing pressure. Plentiful well-priced virgin supplies is contributing to a shift in raw materials preference among molders, who are often opting for these offgrade resins due to their equal or lower cost compared to recyclable materials. While some buyers are willing to pay a premium for post-consumer resins, both for a love of the environment and to show social awareness, economic viability is still very important. Recycled polyethylene and polypropylene are typically used in durable goods such as pipes, pallets, plastic lumber, and gardening supplies because they are usually cheaper than virgin resin. However, the competition from low-cost offgrade resin is proving to be a challenge for recyclers who have relatively high costs to gather, clean, grind and re-extrude the resin into repossessed pellets. There are also concerns about whether buyers will remain committed to using recycled resin to meet their sustainability goals and pledges. It is suggested that companies need to take a longer-term view when it comes to their sustainability goals and the use of less virgin and more recycled materials. They need to consider the average cost of post-consumer polyethylene or post-consumer polypropylene versus offgrade virgin over a longer time span and whether or not it's worth to pay up for the intangible goodwill and marketing benefits. Long-term supply contracts could potentially provide a solution for recyclers, but the preference for maintaining the option to switch back to offgrade virgin is a deterrent. Despite the challenges, demand for recycled resin is growing, but recyclers need to be prepared to deal with the competition. The current market environment is tough for recyclers as they are competing against off-grade pellets, in addition to virgin pellets. The key question is whether they can financially weather the storm.

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NOVA Chemicals and Plastic Energy: A Partnership for Sustainable Plastic Solutions

NOVA Chemicals, headquartered in Calgary, is contemplating a collaboration with Plastic Energy, a chemical recycling firm, to construct a pyrolysis plant in Sarnia, Ontario. The proposed plant, set to be the largest of its kind in Canada, is projected to process up to 66,000 metric tons of scrap plastic annually. This initiative aligns with NOVA Chemicals' 2030 sustainability objectives, which include increasing the utilization of recycled plastics and reducing the amount of plastic waste that ends up in landfills. The plant would employ Plastic Energy's patented TACOILâ„¢ process to convert post-consumer plastic waste into a feedstock for creating new, virgin-quality polyethylene. This project would supplement NOVA Chemicals' existing CAD 2 billion investment in Ontario, potentially creating new jobs and contributing to the local and Canadian economies. NOVA Chemicals is a significant player in the plastics and petrochemicals industry, boasting a total annual production capacity of approximately 3.8 billion pounds of polyethylene,1.8 billion pounds of ethylene, and 250 million pounds of co-products. In addition to their chemical recycling initiatives, NOVA Chemicals has also been active in mechanical recycling partnerships. The company has set an ambitious target to ensure 30% of its total polyethylene sales come from recycled sources by 2030. To this end, NOVA Chemicals has entered into purchase agreements with established plastic reclaimers Merlin Plastics and Revolution. The company also recently unveiled a range of recycled products under its NOVA Circular Solutions division. These efforts underscore NOVA Chemicals' commitment to creating a circular economy for plastics, where materials are reused and recycled, thereby minimizing waste and maximizing resource efficiency.

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ExxonMobil Earns 7.9 Billion in Second Quarter 2023

Exxon Mobil Corporation, a leading integrated energy, petrochemical and resin producing company, has announced its Q2 2023 earnings, which amounted to $7.9 billion, or $1.94 per share assuming dilution. The company's capital and exploration expenditures were $6.2 billion in Q2 and $12.5 billion for the first half of 2023, aligning with the company's full-year guidance of $23 billion to $25 billion. ExxonMobil's Q2 results reflect a doubling of earnings from five years ago in a comparable industry commodity price environment. The company's earnings for the first half of the year totaled more than $19 billion, and it is on track to structurally reduce costs by $9 billion at year end compared to 2019. The company also achieved record quarterly production in the Permian and Guyana, demonstrating excellent operational performance. This includes a 20% year-over-year increase in production in Guyana and the Permian. ExxonMobil has expanded its leadership in carbon capture and storage by agreeing to acquire Denbury and reaching 5 million metric tons per year of CO2 offtake contracts with industrial customers. This move is part of the company's strategy to grow its Low Carbon Solutions business and reduce Gulf Coast industrial emissions by 100 million metric tons per year. The company's cash flow from operations totaled $9.4 billion and free cash flow was $5.0 billion. ExxonMobil's debt-to-capital ratio remained at 17% and net-debt-to-capital ratio was 5%, reflecting a period-end cash balance of $29.6 billion. In Q2, shareholder distributions of $8.0 billion included $4.3 billion of share repurchases and $3.7 billion of dividends. The Corporation declared a third-quarter dividend of $0.91 per share, payable on Sept. 11, 2023, to shareholders of record of Common Stock at the close of business on Aug. 16, 2023. --The Plastic Exchange

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Chevrons Q2 2023 Key Highlights

Chevron Corporation (NYSE: CVX), a leading integrated energy, petrochemical and resin producing company, has reported Q2 2023 earnings of $6.0 billion, a decrease from $11.6 billion in Q2 2022. Adjusted earnings for Q2 2023 stood at $5.8 billion. The company returned a record $7.2 billion to shareholders in the quarter, marking a 37% increase from the same period last year. Chevron's Chairman and CEO, Mike Wirth, highlighted the company's strong quarterly financial results and record production in the Permian Basin. The company plans to further increase its US investments with the proposed acquisition of PDC Energy, Inc., expected to close in August 2023. This acquisition is anticipated to add $1 billion to annual free cash flow. In Q2 2023, Chevron's earnings decreased primarily due to lower upstream realizations and lower margins on refined product sales. Sales and other operating revenues were $47.2 billion, down from $65.4 billion in the year-ago period, mainly due to lower commodity prices. Worldwide net oil-equivalent production increased by 2% from the year-ago quarter, primarily due to record Permian Basin production. The company's Board of Directors declared a quarterly dividend of $1.51 per share, payable on September 11, 2023. Even as revenue has dropped from the prior year, the industry remains strong. --The Plastic Exchange

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Atlantic Hurricane Season 2023: Unprecedented Warm Waters Fueling Intensity

North Atlantic Ocean temperatures have reached record-breaking levels, with an average sea surface readings of 76.8° Fahrenheit (24.9° Celsius) observed on July 26th. A series of shallow buoys of the coast of Florida recorded water temps in excess of 100° Fahrenheit. These unprecedented warm waters are set to impact the Atlantic hurricane season, which is typically busiest from August to early October. Despite the strong El Niño effect, which usually reduces tropical activity, the 2023 season has already had an active start with five named storms and one hurricane, none of which threatened the petrochemical producing part of the Gulf Coast. The unusually warm waters could lead to cyclones strengthening faster and becoming more intense, potentially overriding the El Niño's dampening effect. Several factors contribute to the seasonal ramp-up in August, including low wind shear, rising sea-surface temperatures, and increased instability. The record warmth in the Atlantic Ocean is more than one degree warmer than a 30-year climatological average, and this overheating has occurred early, weeks before the traditional seasonal peak. Seasonal forecasts hint at 18 named tropical systems for 2023, well above the 30-year average. The record-warm Atlantic could boost the intensity of tropical storms and hurricanes, leading to explosive and rapidly developing storms. The US plastics and petrochemical industry, centered along the northwest gulf coast has been vulnerable to significant production disruption storms in the past. Some of these storms have caused massive infrastructure damage, which has restricted monomer and resin supplies and have sent these prices soaring. Even the threat of an impending hurricane could trigger preventative measures and shutdowns, which are already disruptive. Major gulf storms of recent memory include Hurricane Rita (2005), Katrina (2005), Ike (2008), Gustav (2008), Isaac (2012), Harvey (2017), Laura (2020) and Ida (2021). The 2023 hurricane season, covering the entire Atlantic Ocean, the Gulf of Mexico, and the Caribbean region, promises to be one of the most closely watched and potentially impactful in recent history. The combination of record-breaking warm waters and the annual peak of tropical activity sets the stage for a season that could defy expectations and present unprecedented challenges for the petrochemical industry. - - The Plastic Exchange

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A New Era in PGP Production in Texas

Enterprise Products Partners L.P. has announced the commencement of its second propane dehydrogenation (PDH) plant, PDH 2, in Chambers County, Texas. The facility can process 35,000 barrels of propane daily, producing 1.65 billion pounds of polymer grade propylene (PGP) annually. Together with the existing PDH 1 plant, the complex can consume 70,000 barrels of propane to produce 3.3 billion pounds of PGP yearly. A.J. "Jim" Teague, co-CEO of Enterprise, highlighted the importance of propylene, calling it essential to human survival and quality of life. He expressed that PDH 2 would provide cost-advantaged production to meet global demands. The new plant is part of Enterprise's $3.8 billion growth projects, expected to generate new revenue streams by the end of 2023. The company's total capacity for propylene production now reaches 11 billion pounds per year. The PDH 2 facility is integrated with Enterprise's existing propylene system, including over 1,000 miles of pipelines, 3 billion pounds of storage, and an export capacity of 4 billion pounds annually. This expansion strengthens Enterprise's infrastructure network, allowing customers to balance supply and demand efficiently. The launch of PDH 2 marks a significant step in Enterprise's commitment to innovation and growth in the petrochemical industry. --The Plastic Exchange

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Yellows Collapse Insight into the Largest Trucking Bankruptcy in U.S. History

Yellow, a prominent American freight carrier, is facing an imminent shutdown, marking a significant moment in the nation's freight history. Despite receiving a $700 million federal pandemic loan three years ago, the company is expected to file for bankruptcy. The Teamsters union, representing Yellow's 22,000 unionized workers, has announced the closure, and 30,000 jobs are at risk. The downfall began with a loss of customers due to union disputes and years of financial difficulties. A recent strike threat by the Teamsters accelerated Yellow's collapse. Although the strike was averted, the uncertainty led to an 80% drop in freight volumes within a week. Yellow's cries of cash shortages during union negotiations further scared off customers, and a failed attempt to restructure its operations this spring led to legal battles. Yellow's alleged misuse of a $700 million bailout loan and a congressional probe declaring the loan disbursement a mistake added to the company's woes. The end of Yellow means potential disruptions in the freight industry, with other carriers possibly absorbing Yellow's business. However, retailers and manufacturers could face higher shipping rates, as Yellow was known for its low rates compared to rivals. The situation at Yellow serves as a stark reminder of the fragile nature of the freight industry and emphasizes the importance of sound management and adaptability. The loss of Yellow is not just the end of a company but a significant chapter in American freight history, with the gates chained up at Yellow's terminal symbolizing the company's tragic end. --The Plastic Exchange

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A Resilient Performance Amidst Economic Challenges

Eastman Chemical Company, a global specialty materials company, announced its second-quarter 2023 financial results. Despite a persistently weak demand environment, the company demonstrated solid sequential improvement in earnings, driven by disciplined pricing, lower variable costs, and cost-saving initiatives. However, sales revenue decreased by 17% primarily due to a 15% lower sales volume/mix. The company continues to focus on what it can control, including price discipline, cost reduction, and working capital management, amidst a challenging global economic environment. Eastman is also making progress on its circular economy initiatives, with a target to produce material and realize revenue around year-end from its Kingsport, Tennessee, methanolysis facility. For the full year 2023, Eastman expects to reduce its cost structure by more than $200 million net of inflation and remains on track with its full-year 2023 cash target with aggressive actions to reduce inventories. The company expects second half adjusted earnings per share (EPS) to be somewhat below the first half and for 2023 EPS to be between $6.50 and $7.00. In addition, Eastman continues to expect to generate $1.4 billion of operating cash flow in 2023. --The Plastic Exchange

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Myers Industries Q2 2023: Adapting to Challenges and Eyeing Growth

Myers Industries, Inc., a leading manufacturer of polymer and metal products, announced its Q2 2023 results, revealing a 10.6% decrease in net sales compared to the same period last year. Despite macro-economic and inflationary headwinds, the company maintained gross margins and expanded further, with self-help initiatives driving margin growth. The company is focusing on a more variable cost structure and is well-positioned for recovery in key markets. Strong demand in agriculture, military products, and e-commerce has been noted, along with positive dynamics in the tire market due to electric vehicle growth. To mitigate softer demand in the RV and Marine sectors, Myers has taken cost reduction actions, including deactivating a facility and driving targeted cost containment. While lowering revenue guidance for the full year, the company's earnings capability is expected to remain resilient. The Material Handling segment saw a decrease in net sales by 17.2%, while the Distribution segment increased by 8.5%. Cash on hand totaled $30.7 million, with total debt at $88.2 million as of June 30, 2023. CEO Mike McGaugh expressed confidence in the company's strategy and team, emphasizing the commitment to transform Myers into a high-growth organization. The company's forward-looking statements reflect a focus on sustainability, strategic growth, and adaptability in a complex operating environment. --The Plastic Exchange

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Westlakes Mixed Q2 2023: Growth in Housing, Decline in Performance Materials

Westlake Corporation's Q2 2023 results revealed a mixed performance. The company reported net sales of $3.3 billion, net income of $297 million, and EBITDA of $690 million. The Housing and Infrastructure Products (HIP) segment saw a 13% increase in sales volumes from Q1 2023, benefiting from seasonal residential construction demand and lower raw material costs. Conversely, the Performance and Essential Materials (PEM) segment faced challenges, including a 6% decrease in average sales prices and unplanned outages impacting income and EBITDA. Overall, the company's sales prices decreased 4% compared to Q1 2023, while sales volumes increased 1%. Year-over-year, there was a 15% overall sales price decline and a 13% sales volume decline. PEM's EBITDA margin dropped to 20% from 26% in Q1 2023, while HIP's increased to 22% from 20%. Net income decreased by $97 million compared to Q1 2023, mainly due to lower sales prices and margins in PEM, partially offset by higher volumes in HIP. Albert Chao, President and CEO, acknowledged the global manufacturing weakness affecting the PEM segment but expressed optimism for HIP. He emphasized the company's focus on improving costs, commercializing innovation, and redeploying free cash flow to enhance shareholder value. The company's forward-looking statements include a commitment to addressing customer sustainability challenges and positioning itself well for market improvements. Westlake's diverse product offerings and robust free cash flow of $315 million are seen as key strengths moving forward. --The Plastic Exchange

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Resilience in the Petrochemical Industry

The plastics and petrochemicals industry are navigating a transformative era, marked by innovation, collaboration, and resilience. First, many companies are looking to the future by investing in new facilities. Including BASF's investment in Ludwigshafen, Germany which embodies the industry's commitment to environmental stewardship. By harnessing renewable energy and cutting-edge technology, BASF is setting a precedent for future industry practices. Next, LyondellBasell's strategic acquisition of a 50% stake in Sasol's Louisiana-based polyethylene complex showcases the industry's ambition for global expansion while aligning resources and technology. LyondellBasell and Sasol are forging a path that others in the industry may soon follow. Finally, Myers Industries' Q2 2023 financial results provide a candid snapshot of the industry's current challenges and adaptability. Despite facing macro-economic headwinds and a 10.6% decrease in net sales, Myers has maintained gross margins and embarked on cost reduction initiatives. Their focus on variable cost structures and focusing on strong industries illustrates the industry's agility and readiness for recovery. Together, these developments paint a vivid picture of an industry in flux but firmly rooted in innovation, collaboration, and strategic planning. The emphasis on sustainability, global reach, and adaptability to market conditions reflects an industry that is not only responsive to today's challenges but also proactively shaping its future. In summary, the plastics and petrochemicals industry's outlook are one of promise and potential. Guided by technological advancements, strategic partnerships, and a resilient approach to economic pressures, the industry is poised for growth and sustainable success. The stories of BASF, LyondellBasell, and Myers Industries are emblematic of this exciting trajectory, heralding a new era for the industry at large. --The Plastic Exchange

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Frequently Asked Questions
What is The Plastics Exchange?
The Plastics Exchange is the spot market for trading commodity grade resins and a trusted source of market intelligence.
What is the Spot Market?
It is the stream of discretionary resin offers available for prompt shipment. Generally generic prime and offgrade railcars and positioned inventory.
How much resin is generally available?
We normally see about 10-25 million lbs of spot resin each week, but occasionally, in very loose markets, have had more than 50 million lbs offered on the spot floor.
Who supplies The Plastics Exchange?
The Plastics Exchange has direct supply from some producers and trading relationship with most major distributors and traders, canvassing the industry bringing supply from pretty much all major producers, some more than others. All offers are kept anonymous, even after the trade.
How do you keep the trading anonymous?
Since we handle credit and logistics, there is no need to ever disclose the buyer and the seller to each other. This feature allows for even competitors to trade together - and nobody ever needs to know about it!
How much resin is traded on The Plastics Exchange?
We see anywhere between 10 and 40 million lbs per week, it depends on market conditions. Sometimes there are a lot of Generic Prime railcars, other times more offgrade. Sometimes producers are selling lots of railcars, other times it is just distributors who are looking to move their inventory in bulk or packages.
Do you have salesmen?
Not the traditional type that sell Branded Prime and spend the week entertaining customers. We have traders that guide the spot resin flow, and match transactions through the website, by email and telephone.
What kinds of resin are traded on The Plastics Exchange?
We trade commodity grade Polyethylene, Polypropylene and Polystyrene, both Generic Prime and offgrade in railcars and truckloads (bulk or packaged).
Can I buy just 10K lbs at a time?
Not from us, but thank you. Your traditional distributor is best suited to supply your needs. We would be happy to make a referral.
Can I buy a Specific Brand from The Plastics Exchange?
We do not sell branded prime, but can generally get you a Generic Prime substitute to fit your needs. If you do require a specific brand, you need to maintain your current supply channel, be it though a Distributor or Producer direct.
What is Generic Prime?
Generic Prime is the same pellet as branded prime, but without the producer certification. It is surplus Prime resin that producers wish to sell, but quietly without disrupting their current sales channels.
What is Pencil Prime?
AKA Downgraded prime, or Prime No Certs. This is resin Prime quality that does not come with producer certs. Not for ultra critical applications, but more for commodity applications that require prime resin quality at a discounted price and do not need a specific brand.
What kind of Certs does The Plastics Exchange provide?
The Plastics Exchange will certify that the resin sold as Generic Prime meets the producers prime specification.
What is offgrade or widespec resin?
Resin that does not meet the producer’s prime specification is sold as widespec or offgrade. Quality variations with Melt Flow, Density, Izod, Color etc.
Do you certify offgrade?
The Plastics Exchange will also certify that offgrade resin will be delivered substantially as represented. However, there are inherent risks in offgrade resin as producers often provide less quality information with such offerings.
What if I have a problem with the resin purchased on The Plastics Exchange?
If the resin, when delivered, was proven to be not as represented, we will take it back at its current location. In addition, The Plastics Exchange reserves the right (but is not obligated) to replace the resin that was deemed mis-represented. We are very diligent to qualify only reliable suppliers to The Plastics Exchange, but even with players of the utmost integrity, unintended problems can arise.
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