PRICE SURGE IN PLASTIC RAW MATERIALS
In recent months, there had been increases in plastic raw material prices up to 100%. This is causing both an increase in product prices and also a shortage in supply.
Inflation risk in plastic raw materials prices is increasing for 2021. However, priority was the price stability for the plastic manufacturers. Moreover, this inflation will bring price increase in most of the products that we use.
Another risk is supply shortage which is caused by raw material price increase. These issues are deeply affecting the plastic manufacturing sector.
Plastics are widely used in many products in daily life. Such as the bottle from which we drink water or the thread of the clothes we wear. However the raw material prices of such products increased in varying rates from 23% to 137% in last 6 months.
Representing authorities of plastic manufacturers are making statements on the subject. The most common opinion is that the price increases in plastic raw materials will affect inflation negatively. Also the prices of many daily used goods may be raised.
137% Increase in PVC Raw Material
Manufacturers use PVC mostly in doors, window frames and pipe systems in houses. However the raw material of PVC increased 56% in last 3 months and 137% in last 6 months.
Another plastic material is LDPE film which is used in packaging bags and stretch films. Also it’s used as covers in greenhouses. The increase in this material’s price reached 40% in last 3 months and 60% in last 6 months.
The price increase in raw material of PET bottles and clothes is 40% in 3 months.
Polypropylene is another common plastic mainly used in food packaging. Also it is used as raw material in kids’ toys and in production of various medical equipment. The price increase in plastic raw material of polypropylene is 40% in last 3 months.
The raise in plastic raw material prices will bring together many other price increases. It may affect both the cost and also the selling prices of many daily products. These are many food products, automotive, clothing, household appliances, construction etc. Also a large number of products in all areas of life may be affected from agriculture to electronics. So it looks inevitable for governments to take precautions. Otherwise they won’t be able to reach the inflation goals.
Contacts with Governmental Bodies
Representatives of plastic sector had been in contacts with governmental authorities in Turkey. They had a meeting on the subject with the participation of Deputy Minister of Trade. Also they told the situation and their demands in the meeting.
Their demand was from the local plastic raw material producers to decrease the export to support the local market. So they requested the needed legal steps to be taken. Besides, another request was to suspend the import taxes in raw materials.
High Dependence to Import in Plastic Raw Material
According to trade figures in Turkish market, only 15% of the plastic raw material is produced domestically. So 85% is depending on import market.
It is also pointed in the meeting that main factor in price raise is cartels. So the cartels that exist in the petrochemical industry deliberately cut production.
As a result of the situation, many producers are production cuts in recent years. However, the rise in oil prices and recent recovery in demand don’t look to be the main reasons.