Skyrocketing inflation, surging gasoline prices, and the rising cost of goods is not expected to come down anytime soon for Americans. According to Reuters, gas prices are the highest in nearly 17 years, and prices are going up at their fastest rate since the early 1980s. In fact, the CPI climbed to 7.9% in February, and this is the biggest annualized growth in CPI inflation since January 1982.
The Ukraine War has caused additional volatility with regard to rising gas prices, and the inflated pricing is having an impact on transportation and logistics on top of already established supply chain issues. As a result, resin pricing will stay up for the foreseeable future.
What is resin? Resin is a solid or highly viscous substance of plant or synthetic origin that is typically convertible into polymers. The high-quality plastic boxes from Alpha Rho are made with polystyrene, a synthetic polymer which is manufactured from petroleum.
Although increases in energy costs were a concern before Russia escalated its hostilities against Ukraine, the implementation of sanctions on Russia, a major producer of oil, has led to further increases in the cost of goods for both resin manufacturers and buyers.
The impact has a domino-effect. The increase in gas prices has led to increases in other costs involved with moving materials which will keep prices up. Constraints on moving goods mean warehouse storage near our busiest ports is beyond maximum capacity, and they cannot accept additional containers until the containers waiting on the dock ship. Additionally, railcar storage is beyond capacity due to the need for cars to be emptied and released. This impacts port congestion, with all ports and sites nearby being 100% over capacity. All of this leads to overall price increases which will continue due to logistics and staffing issues along with energy cost increases.
Demand for resin remains strong, and prices continue to settle or have increased slightly as of mid-March. Some inventories are beginning to grow, but additive shortages continue to impact availability. For polystyrene, demand is strong, but the shortage of raw materials and unprecedented logistics issues will continue, leading to increases in prices.
Resin supply chain issues will likely continue through 2022, according to Plastics News. In an interview, Howard Rappaport of StoneX Group stated, “producers have leverage and will continue to pass through higher cost increases associated with higher oil and gas prices. However, supply-demand is still very powerful in our business and if the dynamics shift around, there’s still plenty of margin in some of these commodity resins. Producers may have some margin to give if the dynamics change a little bit and the ability to pass through those increases doesn’t exist.”
What can you do to soften the blow of increasing resin prices? Place your plastic box orders well in advance so you can lock-in the lowest price possible and secure the supplies you need throughout the year. Also, as we discussed in this previous blog post, when you order from USA-based manufacturer Alpha Rho, you can avoid many of the logistics issues faced by manufacturers from overseas. We try to buy our resin locally to reduce distribution and transportation costs. We also make every effort to run our operation more efficiently through cost-efficient lighting and heating, and seeking out lower-cost raw materials without sacrificing our quality standards.
“War in Ukraine deals another blow to resin prices,” Plastics, Machinery & Manufacturing
“Resin supply chain issues may remain through 2022,” Plastics News
Alpha Rho products are made in the USA in North Central Massachusetts
We’re proud to be an American manufacturer of plastic boxes headquartered in Fitchburg, MA! In fact, we’re the largest manufacturer of high-quality rigid plastic boxes in New England/Northeast US. Alpha Rho has been a leading supplier of injection-molded plastic boxes, with a reputation for providing dependable plastic packaging solutions for over 50 years. Our custom rigid plastic boxes — compartment, hinged, friction fit, custom shapes – are used extensively in multiple industries, such as retail and hobby, food and confectionary, medical and industrial.