We're now into March of 2021, and we're seeing continued price increases almost universally across all types of plastics.
Winter Storm Uri (Feb. 13-17, 2021) and Winter Storm Viola (Feb. 15-20, 2021) brought significant challenges to large portions of the country with shipping delays, power outages, or complete shutdowns of entire cities; but the impact appears to be something we will be dealing with for even longer than initially expected.
What are the real world issues we're now seeing as a result? We'll explore that below, but a brief summary would be increased delays and production timelines, increased prices, and dramatically decreased supply on a number of materials.
First up, delays and timelines that have been dramatically shifted as a result of the storms. Some of these are based on forced shutdowns due to power outages, others based on damaged and failed equipment, all compounded by planned shutdowns previously have left delays and modified timelines universally being pushed across the board. Two of the most heavily hit commodity materials have been Polypropylene (PP) and Polyethelene (PE) materials that have seen massive plant outages. The areas most heavily affected are also home to a majority of petrochemical processors and facilities that have struggled to cope with the weather affects since they hit in February.
On the resin side of things, major players such as Chevron Phillips and ExxonMobil saw shut downs resulting in massive decreases in capacity and production. There have been estimates as severe as 80-85% of PE and PP productions having been affected by the shutdowns in the region, and these issues don't include all the additional shut downs and delays brought by transit delays.
These delays and shutdowns almost immediately started to cause price increases dating back into February. Resin prices on Polyethylene (PE), Polypropylene (PP), Polystyrene (PS), Polyvinyl Chloride (PVC) and PET all saw increases almost immediately in mid-February.
This follows price increases seen already in January to start off the new year, due to increased demand resulting from COVID-19. Demands for export material have also increased since the start of the pandemic, which has compounded with needs domestically that have ultimately resulted in even further increases as we enter March. This has resulted in many companies declaring force majeures in many instances and for many companies. Dow Chemical, BASF, Westlake Chemical, Celanese, etc have all declared force majeures on many items and the result is immediate increases and uncertainty for deliveries.
Everything is compounding to show unprecedented price increases and highs for many items including LDPE and HDPE, highs we haven't seen in over 10 years. High prices, and steeply decreased supplies will continue to create difficulties within the industry until these supply constraints can be culled a bit.
Luckily, efforts are being made to catch up to demand and get production back to normalcy, with the cooperation of mother nature we'll hopefully see prices normalize, availability stabilize, and a sense of normal return to the market soon.
We hope this provides some insight into the sudden price increases you're likely seeing, and provide additional information on when we can hope to see a return to normal. Thanks for reading and stay safe!