Raw materials used to make plastic, such as polyethylene (PE), monoethylene (MEG), and polypropylene (PP), have long been affordable and plentiful. Many industrial and manufacturing sectors can no longer count on that steady, cheap supply of plastic inputs. A series of bad events in the petrochemical heartland along the U.S. Gulf of Mexico has disrupted plastic supplies for months. The situation has left plastic raw material inventories low. Manufacturers of everything from automobiles to appliances to medical supplies now face shortages and increasing prices.
Disastrous Weather In The Gulf
In August 2020, Hurricane Laura halted activities at petrochemical plants in Texas and Louisiana. Those shutdowns immediately dropped production of PE and PP by 10 to 15 percent. The storm-related production disruption prompted big polymer producers, like LyondellBasell and Chevron Phillips Chemical, to alter contracts with customers due to the unforeseen events.
As plastic producers in the Gulf region recovered from the hurricane, severely cold weather froze the area and interrupted the power grid in February 2021. The plants clustered in this region are responsible for making dozens of chemicals needed by numerous other industries and manufacturers. Some plants remain offline even a month later and may not be fully back up and running for six months.
Higher Plastic Prices
The prices of many raw polymer materials are now at a record high in the United States. S&P Global Platts reported that polyvinyl chloride (PVC) costs twice as much now as in summer 2020. According to TecPart, ABS plastic used by automakers had gone up 35 percent in six months.
An EuPC report about the European polymers market also details the price increases and shortages experienced by the sector. Production of anything containing plastics in Europe had begun to slow down as a result.
Has your company run into problems obtaining plastic? Do you expect the shortage to impact production?
ABOUT LyondellBasell
LyondellBasell (NYSE: LYB) is one of the largest plastics, chemicals and refining companies in the world.
Driven by its employees around the globe, LyondellBasell produces materials and products that are key to advancing solutions.  From modern challenges like enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes, improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road, and ensuring the safe and effective functionality in electronics and appliances.
LyondellBasell sells products into more than 100 countries and is the world’s largest producer of polypropylene compounds and the largest licensor of polyolefin technologies. In 2020, LyondellBasell was named to Fortune Magazine’s list of the “World’s Most Admired Companies” for the third consecutive year.
ABOUT Chevron Phillips Chemical
Chevron Phillips Chemical was established in July 2000 as a joint venture between Chevron U.S.A. Inc. and Phillips 66 company, combining the chemicals operations of both owner companies.
We are committed to conducting our business in a sound, responsible manner consistent with the highest standards and principles of our industry, our leadership, our employees and our public. Our mission and value statements help us maintain our focus — both as individuals and as a company.
We responsibly manufacture chemicals and polymers the world needs, provide enriching careers and create shareholder value because we care about each other, our customers and our communities.
ABOUT TecPart
TecPart is the representative of manufacturers of technical plastic products in Germany. For its members the association is active in public relations and political lobbying. TecPart supports its members to assure success in the global market and to benefit from the potentials of the plastics industry. TecPart is a member association of the German Association of the Plastic Manufacturing Industry.
Members are: Mainly small and medium enterprises, component and tier 1 suppliers for the automotive, electrical and other industries specialized in design, construction and manufacturing of technical plastic products and tools as well as injection moulding, thermoforming and other technologies.
Article Sources
https://hbr.org/2021/03/the-latest-supply-chain-disruption-plastics
https://www.wsj.com/articles/one-week-texas-freeze-seen-triggering-monthslo…
https://packagingeurope.com/raw-material-shortages-in-europe-impacting-prod…
https://www.bloomberg.com/news/newsletters/2021-03-25/supply-chains-latest-…
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