From the beginning of 2021 until now, both the general commodity market and the plastic pellet market in particular have seen price increases. Especially, certain types of plastic pellets have experienced significant price hikes during the mid-2021 period. Why has there been this sudden increase? And how will the plastic pellet market fluctuate in the near future? Let's explore the reasons behind the rise in plastic pellet prices to come up with better handling strategies during this time!

Causes of the Increase in Plastic Pellet Prices in November 2021

The prices of various plastic pellets are currently showing a strong upward trend, especially during the mid-2021 period. So, what are the reasons behind the rise in plastic pellet prices? We will reveal the reasons right here:

1. Rising Oil Prices and Restrictions on Crude Oil Imports and Exports due to the Pandemic

You probably already know that plastic pellets are made from petroleum-based products, such as PP and PE plastics. Therefore, the prices of plastic pellets are directly affected by changes in oil prices. It can be seen that crude oil prices surged in mid-2021, reaching their highest level in 2 years. However, Vietnam's crude oil exports decreased, and prices were cheaper than in previous years. Specifically:

  1. Oil prices surged between February and March 2021.
  2. Brent crude oil prices increased by 3.9% to $69.36 per barrel in May.
  3. Light sweet crude oil prices in the US increased by 0.8% in early March to $61.74 per barrel.
  4. By early March 2021, oil prices had increased by over 25% compared to the beginning of the year. This period coincided with the gradual economic recovery and increased energy demand worldwide.
  5. Some major plastic pellet manufacturing plants are undergoing maintenance.

Increasing Prices of Raw Materials
Increasing Prices of Raw Materials

Statistics show that the supply of plastic pellets has become tighter in Southeast Asia. This is because some major plastic pellet manufacturing plants are undergoing maintenance. These plants have been continuously shut down, leading to disruptions in plastic pellet supply at the same time. Specifically:

  1. The 200,000-ton/year Lotte Chemical Titan plant in Malaysia ceased operations.
  2. The 300,000-ton/year Hyosung plant in Vietnam stopped operating due to technical issues.
  3. The 400,000-ton SC plant 5 in Thailand also slid into maintenance mode.
  4. Major PVC plastic plants in China and Japan will also close at the end of February 2021.
  5. The maintenance season in the Asian PVC market will also begin at the end of February and last until the end of April. This is a major factor leading to a sharp increase in plastic pellet prices.
  6. Shipping costs have increased significantly.

Amidst the extremely tense Covid-19 situation, sea freight charges have surged like a storm, with shipping companies constantly announcing price increases amid crises in many countries around the world. Specifically:

  1. On May 11, 2021, European container shipping companies increased fees worldwide.
  2. Three of the world's largest container shipping companies announced to customers about a fee increase at the end of May and beginning of June 2021. The increase ranges from $400 to $800 per container.
  3. German shipping companies announced a general price increase on routes from East Asia to the US and Canada starting from May 15, 2021.
  4. CMA CGM announced a new freight rate increase from mid-May 2021 on many routes from Somalia to Northern Europe, the Mediterranean, the Black Sea, India, and Pakistan.
  5. MSC announced a new peak season surcharge increase starting May 18, 2021, with an increase of $800 per container.

It can be seen that the plastic pellet market in 2021 has increased significantly. So how will the fluctuations of the plastic pellet market change in the near future?

2. Predicting Market Volatility in the Near Future

- Packaging plastics' growth depends on industries such as food and beverages. Accordingly, flexible packaging and PET food packaging will have many development opportunities in the future.
- The household plastic industry will have great growth potential but faces competitive pressure from foreign competitors.
- The construction plastic industry shows signs of strong growth.
- Recycled plastics are seen as a new trend in the future. Recycled plastics are favored in developed countries due to widespread environmental pollution. The main recycled plastic products are PET bottles and food packaging.
- The tightening supply of PE plastic pellets will lead to a sharp increase in PE plastic pellet prices in the last months of the year.
- PP plastic pellet prices continue to rise.
- PVC plastic prices remain stable and are forecasted to remain flat.
Overall, plastic pellet prices are forecasted to increase slightly in the last months of the year and will maintain a sideways trend.

To receive the most competitive price quotes at this time, please contact TTC Packing - a reputable company with quality assurance.

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