August 2009 Packaging News

Polypropylene:  Propylene resin prices reached their lowest point after the first of the year and have increased approximately 15% over the past several months.  Oil reached a peak in June/July and is expected to drop over the next several months. Resin prices are tied very closely to fluctuations in the oil markets and therefore woven polypropylene products should follow this same trend. By the end of the year we expect prices to be back where they were in January.
 
Polyethylene: Recent price increases have held and prices are expected to remain firm over the next couple months. The lower inventories were one factor that supported the increase, as well as a small increase in demand. Exports dropped off suddenly which may cause prices to drop slightly in the coming months.
 
BOPP: The popularity of this style of packaging continues to gain market share with more plants importing the equipment needed to make the bags in the US, as well as additional plants coming on line in the Asian countries. At this point, though, capacity in the world market far exceeds world demand for this type of product so pricing will remain very competitive. The European markets have not accepted this product and continue to focus on PE bags as an alternative to paper.

Multiwalls: Paper prices have been firm and no changes are forecast for the near future.  Multiwall prices are stable and lead times are running 4-6 weeks if the plant has the paper on hand.  The bag plants have trimmed the amount of paper they keep in stock dramatically so any sudden increases in demand could increase lead times as well. Demand for valve bags has started to increase while sewn and pinch styles remain constant.
 
Boxes: Corrugated prices have stabilized and there is no indication of any increases as we head into the fall months.
 
Ocean Freight: There has been some talk of increases in container prices but we expect this to be a short term increase. Containers are arriving on schedule in most cases and many ships remain idle due to the drop in world demand over the past year.  Newer larger container ships that were ordered years ago during the stronger economic conditions are still scheduled to be delivered to companies starting next year.

June 2009 Packaging news

Packaging

Polypropylene: Over the past year, we have seen significant swings in a short period of time with respect to raw material prices and the resulting prices of polypropylene packaging. Propylene resin prices overseas have increased considerably since January 1, 2009 while very little has changed in the domestic market, just minor fluctuations up and down.  Prices have moved up slightly recently.  With crude oil prices at a record high of $147/barrel in the summer of 2008, polypropylene resin and the polypropylene bag prices reached record highs. By mid-August 2008, the Far Eastern price of polypropylene resin was $1750/metric ton. However, with the onset of the global recession by the end of October 2008, polypropylene resin was at $915/metric ton and by the first week of December, it reached a low point of $750/metric ton. Since then it has been gradually moving up and by the end of April 2009 it had reached about $1100/metric ton.    This quick and abrupt swing that took place last year was totally unpredictable and it left most distributors of polypropylene bags in a position of receiving higher priced bag inventories as the market was dropping. As of May 2009, many of those bags have been absorbed by the market .   Since the beginning of 2009, due to the increase in the raw material price, the price of imported woven polypropylene bags has increased approximately 20 – 25% while domestic prices have changed very little. There are factors like speculation, currency adjustments, ocean freight rates, and crude oil prices that can all come into play and have an effect on polypropylene bag prices.   Polyethylene: After a series of drastic cuts in the US resin market from September 2008 through January 2009 that saw prices drop 48 cents/pound, we are starting to see the arrow go the other way.  There was a 5 cent/pound increase announced in March that did not hold but the resin suppliers have been successful in implementing 3 cents of this nickel as of May 1st. The biggest issues that may impact pricing could be strong export sales of resin, especially to China, and a very tight tight supply of domestic resin, even with poor domestic demand.     BOPP: A lot of new equipment has come into the United States to produce the laminated BOPP bags domestically, and more equipment is expected to arrive over the next several months. Many other countries are now offering this package since the anti-dumping decision against China earlier last year.   Multiwalls: Paper prices have been steady or down slightly due to lack of demand and a decrease in pricing from paper mills.  There are no changes forecast for the near future. The domestic manufacturers are still feeling the effects of the conversion from the old standard 3 ply kraft shipping sack to the imported paper/poly bags and the huge movement to the poly laminates.  Multiwall prices are stable and lead times are running 4-6 weeks if the plant has the paper on hand.  The bag plants have trimmed the amount of paper they keep in stock dramatically so any sudden increases in demand could increase lead times as well.   Boxes: Corrugated prices have stabilized and there is no indication of an increase through the summer. This market has seen a $45.00/ton price decrease in the last 4 months that has caused finished box prices to drop between 7-8%.  This softness in the linerboard market is not expected to strengthen any time soon.  It will take a strong increase in the manufacturing industry to get the box shipments moving in an upward line again.   Ocean Freight: Rates have dropped about $300 per container the last couple weeks heading into the summer peak shipping season which will begin in June and run through November. Containers are arriving on schedule in most cases.

March 2008 Packaging News

Paper mills started sending notices of a $50/ton paper increase to converting plants several weeks ago. Many increases will start taking effect March 1st with the possibility that all mills may increase by the end of March. Most convertors are increasing their prices 5-6% effective with shipments starting April 1st. Paper continues to be tight, with lead times from the paper mills on high performance sheets running 5-6 weeks and regular kraft sheets running 3-4 weeks. Lead times at converting plants are running 1-2 weeks additional since their production is limited these days due to the availability of paper. Demand for valve bags is running 10 weeks or longer due to early buying by the concrete industry. Corrugated products could see an increase by the end of March.

Resin prices have softened, and there have been some decreases since the first of the year. This market is expected to continue for the next 30 days. The rising cost of oil continues to drive up the price of resin overseas, and likewise the cost of any packaging that contains polypropylene or polyethylene. Since this time last year, the price of woven products from overseas have increased 12-15%. The increase in the world price of resin and the devalued US dollar against other currencies will eventually drive poly prices back up in the US as export demand increases.

The US Department of Commerce announced their findings at the end of January on the issue of the alleged dumping of laminated packaging from China. They have determined that Chinese producers are dumping laminated woven sacks into the US market and have recommended increased duties for these products. They have announced preliminary duties on these imported goods of 63.89% to 108.09%, depending upon the extent the company in China was found to be in violation.

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