(March 14, 2005) — It's a question that makes resin executives dance around like snowbound Midwesterners arriving on the hot sands of a Florida beach: Will high resin prices lead to reduced demand?
Resin execs have an answer, of course; and the answer is no, plastic is still an affordable alternative to many other competing materials, even with resin prices up 40-60 percent since early 2004.
But in that time, a number of stories have surfaced about alternate materials — many long thought vanquished by the power of plastics — creeping back into the picture because of high resin prices. The following examples are based on conversations with resin buyers in the past year or so.
A pair of pet products have said “no thanks” to plastics. In the first case, a dog-food maker wanted to switch his product from a paper sack to a high-end plastic one, but held off as resin prices climbed. A maker of cat-box litter wanted to start selling its product in a plastic bucket, until market research showed the price of the bucket would exceed the value of the litter. Meow!
In the frozen-foods aisle, an ice cream producer switched from a gallon-size bucket back to coated paperboard, even though the paperboard product is more easily damaged during shipping and can cause yellowing to vanilla ice cream. Pennies were pinched and the cold-hearted switch was made.
And a consumer products firm made a two-for-one switch during this past holiday season. The company replaced a plastic garbage can with a metal one, while using fabric for a wrapping paper storage item that had been a plastic case. In each case, the firm paid a little more for the alternate material, but was able to command a higher selling price and a higher margin as a result. Such changes probably would not have been considered when the price gap between plastic resin and alternate materials was wider.
In some cases, however, prices for competing materials, from metal to wood to paper to cardboard, are up as well. The price of ductile iron, for example, has climbed so high that it's no longer a deterrent to sky-high PVC prices, and PVC makers have used that fact to their advantage.
Likewise, an argument can be made that those scattered examples have done little to deter actual plastic usage. American Plastics Council statistics through November showed domestic high density polyethylene sales up almost 10 percent vs. the same period in 2003. Domestic sales of ABS, styrene acrylonitrile and other styrenics were up similarly, with linear low density PE up almost 8 percent and PVC up nearly 7 percent. North American resin makers had no problem rolling their products out the door.
Yet, even the mere suggestion of product designers making a switch from plastic to an alternative would have been unlikely five years ago. Now it's out there, even if the whispers are faint. It's an issue that needs to be addressed, particularly since the rate of conversions into — not out of — plastic is likely to gain importance as more and more low-end goods are made overseas.
Esposito is Plastics News' Akron, Ohio-based resin reporter.
