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Rising Costs In Plastic Manufacturing

We want to address a concern that many in the portable sanitation industry have raised – the recent spike in the price of plastic.

You may have heard about it or even seen it firsthand through increases in the prices of units, sinks, and sanitizing stations. You may also have noticed that supplies are extremely low right now.

We want to provide you with more info on what is happening, why it’s happening, what it means for our industry, and what (if anything) can be done about it.

What’s Going On?

Since last June, the price of plastic resin has been rising at a rapid rate. Since mid-February, it has escalated to unprecedented levels. In the last month alone, prices have gone up by about 33%. According to Plastics Today, it may be the largest ever monthly increase the market has experienced.

Why Are Prices Rising So Fast?

The main reason is a scarcity of supplies on a scale we haven’t really seen before. It began with a particularly bad hurricane season last September which hit the Texas-Louisiana border area where so much of the world’s plastic is produced, leading to a drop in production and therefore a hike in costs and supply chain issues.

Before the market had time to recover, severe winter storms battered the same region. The Houston area, a petrochemical-producing hub, was hit hard. Plants and refineries faced widescale shutdowns. The result was a whopping 80-85% reduction in polyethylene and polypropylene production. It’s estimated that in two weeks at least 2 billion pounds of plastic resin went unproduced.

How Does This Affect PROs?

Our industry relies heavily on plastic. The manufacturers who supply PROs are impacted, and not just in the United States. The Financial Times reported that thousands of European plastic manufacturers are being hit by price surges.

Not only are prices rising, but lead times are also growing exponentially, with some PROs reporting months-long wait times for some new items, a worrying development to say the least. Manufacturers of plastic products are in a difficult spot because with plastic supplies low they simply don’t have the materials available to maintain their previous level of output.

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What Can You Do?

Check your inventory immediately. Try to forecast and anticipate what you’ll need for the rest of the year, if not longer. Start placing orders now for anything plastic, as you may face difficulty getting supplies quickly. So, the best thing to do is to be proactive.

The Bottom Line

Plastics and market experts are worried about the upsurge in prices and the correlating devastation of plastic supply chains. This may have an effect on the prices of plastic products in the future, with no guarantee that they will go back to what they used to be. Now is not the time to sit around and wait to see what happens. Do what you can to help your company immediately, because we could be in for a rough ride for a while.

Looking to Take Your Portable Restroom Business to the NEXT LEVEL? Download our FREE Guide: “Your Guide to Operating A Portable Restroom Business.”

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