| 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. |
