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Plastic Price Hike Affecting Prices of Industrial Products

According to PlasticNews.com, a trade news website for the plastic production industry, the cost of polypropylene might increase by up to 20 US cents per pound in January 2011. These have led many industry experts to warn that manufacturers may have no choice but to pass on the added costs to the consumers themselves.

Causes of the price hike

The price hikes are blamed on two main factors, namely production problems and the rising cost of oil. Most of these production problems revolve around plant shutdowns. For instance, Dow Chemical Co.'s St. Charles plant in Hahnville, Alabama, suffered from an electrical outage last January 3.

A new firm in Houston, PetroLogistics, has also delayed the opening of their new manufacturing facility to the end of the month. The site, a former plant owned by ExxonMobil Chemical, was expected to relieve some of the supply problems.

The latest data from the Energy Information Administration states that in 2006, about 331 million barrels of liquid petroleum gas (LPG) and natural gas liquids (NGL) were used as feedstock and fuel for plastic manufacturing processes. But with each barrel of crude oil already costing around $91 this January, manufacturers are pressed to cut costs.

This has led plastic manufacturers to switch from crude oil-based feedstock to natural gas because of its lower cost. And despite the smaller amounts of polypropylene produced from natural gas, manufacturers are reluctant to return to using crude oil. Apart from price, some manufacturers also want to stick to natural gas because it is seen as a kind of renewable energy source.

Effect on the absorbents and industrial products industry

So what do all of these have to do with absorbents? Many absorbents in the market today are made of polypropylene. A 2007 article in the Seattle Times estimates that around four billion pounds of plastics a year are used to make absorbent products. Because of these polypropylene price hikes, the price of traditional absorbents is also expected to rise. The price of industrial equipment that has polypropylene parts may also be affected.

Thankfully, there are now alternatives to traditional, melt-blown polypropylene absorbents. These eco-friendly and green alternatives are considered more cost-effective than their plastic counterparts by being able to soak up to 25% more liquid. And since they are not made from raw polypropylene — they are made from recycled materials, such as cellulose - the price of these eco-friendly absorbents will remain stable in the near future.

Through buying these eco-friendly and “green" absorbents, companies that might be affected by this plastic price hike can breathe a little bit easier. The money that companies can potentially save from buying these kinds of absorbents may help them tide the other increases in polypropylene industrial equipment. With these absorbents, companies can better plan and implement other cost-saving strategies for increased efficiency and improving their bottom line.

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