Plastic Prices Triple in 10 Months... Inflation Burden Intensifies

[Asia Economy Reporter Byunghee Park] As plastic prices soar to record highs, the burden of inflation is increasing.

According to Bloomberg on the 18th (local time), the export price of polyvinyl chloride (PVC) in the United States has tripled in the past 10 months. The U.S. is the world's largest PVC exporter.

In early May last year, the PVC export price was $540 per ton, but at the beginning of this month, the price surged to $1,600 per ton.

According to ICIS, an international raw material information service company, polypropylene prices have also doubled compared to the 2019-2020 average price and are trading at record high levels. The price of high-density polypropylene, used in shampoo containers and others, has soared to its highest level since 2008.

The reason for the surge in plastic prices is a supply-demand imbalance. As COVID-19 vaccinations accelerate worldwide and signs of economic recovery appear, plastic demand is increasing. On the other hand, supply has decreased due to the shutdown of petrochemical plants caused by a cold wave that hit the central U.S. region last month.

ICIS explained that power outages in Texas and Louisiana caused U.S. PVC supply to drop by more than 60% in the past month. Not only PVC but polypropylene supply also decreased by 65%. Propylene supply dropped by 23%, ethylene by 35%, and high-density polyethylene (HDPE) by 54%.

Bob Patel, CEO of U.S. major petrochemical company LyondellBasell, said at a conference hosted by JP Morgan Chase recently, "In the case of polyethylene, domestic demand cannot even be met, so exports are out of the question," adding, "The situation will improve only in the fourth quarter." Patel added, "Two ethylene crackers in Texas have started operating, but the third plant in Corpus Christi is scheduled to start operating only after three weeks." He predicted that due to the damage caused by the cold wave, U.S. polyethylene production would decrease by about 12% this year.

As raw material prices such as crude oil and metals rise simultaneously, the surge in intermediate goods like plastic prices is expected to further increase inflationary pressure. According to the Producer Price Index (PPI) statistics released by the U.S. Department of Labor, plastic pipe prices surged 16% year-on-year in February.

The supply-demand imbalance in petrochemical products can also affect crude oil prices. This is because petrochemical products such as ethylene and propylene are made from naphtha, a byproduct generated during the refining process of crude oil.

This content was produced with the assistance of AI translation services.