Plastic Packaging Prices
Plastic packaging products often referred to as flexible packaging products fluctuate in price throughout any given year. Unfortunately the majority of price fluctuations are increases in prices. We want to help explain what determines the price of plastic packaging products. First, we need to gain a basic understanding of how plastic products are made.
Most Plastics packaging products and materials are made from plastic resin pellets. The type of pellets and additives to the pellets depend on the type of products being produced. Some plastic pellets include premixed additives and some manufacturers melt the pellets and add the proper additives during production. Different additives achieve different desired results. Some common additives are:
Plastisizers: Increase the plasticity or fluidity of plastics. Commonly used in PVC (Poly Vinyl Chloride) products to make them more flexible and durable.
Colorants: Adds color to plastic materials.
Foaming Agents: Cause the plastic to expand and foam. Commonly used in polystyrene cups and packaging peanuts.
Anti-Statics: Reduces static electricity. Commonly used in a variety of plastic films and materials.
Flame Retardants: Reduces flammability of plastics. Found in plastics around wires and other potentially flammable products.
There are other additives that are added to plastics, but the listed additives are common in the packaging industry.
Once the pellets are melted and additives are added, processing begins. There are a variety of ways to produce plastic products. The most common way in the packaging industry is extrusion. In extrusion, the plastics pellets are melted and forced through a small opening called a die to form the shape of the finished product. During cast extrusion the film is cooled on a conveyor belt of rollers once forced from the die. For blown extrusion the film is blown in a bubble and cooled with air. The cast extrusion process is much more affordable and a preferred method for many manufacturers.
The type of extrusion process does have an effect on the price of the product being produced, but the cost of the resin pellets is the main determining factor. The resin pellets are a petroleum based product. They are made by refining petroleum into ethane and propane. Once refined the ethane and propane are refined to ethylene and propylene. The refined chemicals can be combined with a catalyst to become a polymer. Once the desired polymer is formed, it is extruded and cooled into a hardened form. When hardened, a pelletizer will cut the hard plastic into small pellets. Many different plastic products can be produced from the pellets.
The plastic pellets are considered a commodity. They are bought and sold on open exchanges. These exchanges and petroleum prices are what determine the fluctuation in prices. Manufacturers that produce and extrude plastic products often buy large quantities of pellets when prices are right.
Many extruders will hold off on price changes to distributors and end users until resin supplies run low. It is common for many extruders to raise prices within 30 to 60 of each other depending on inventory levels. One of the most common exchanges for plastic resins is the plastics exchange (www.theplasticsexchange.com).
By going to theplasticsexchange.com, users can view the spot price for a variety of plastic resins. There are a variety of other exchanges, but this is the one we are most familiar with. The exchange has relationships with a large network of resin producers and has access to 100 million+ pounds of resin. Buyers can place bids and sellers can post asking prices just like other more familiar financial exchanges.
Buyers of resins often speculate like many other products traded on financial exchanges. The speculation of buyers and the price of petroleum often determine the price of plastics to the end user. A general rule to go by is: if petroleum prices fluctuate for a moderate period of time, plastic prices will as well.
We are a large volume distributor for a variety of plastic products. We try very hard to hold of price increases as long as possible to our customers. Anytime there is a forecasted price increase we notify our customers with a mass email beforehand to offer time to buy ahead of the price increase. If you have any questions about plastic material prices, call us at 1-800-441-5090 and we will do our best to explain what we know.