(Aug. 18, 2008) — Higher resin prices are roiling everybody in the plastics industry. Rotational molders get hit with a double whammy: resin and cost increases for natural gas, used to heat the large industrial ovens in their factories. Plus, their parts can be really big, so they use lots of resin.
According to Plastics News data, high density polyethylene powder used for rotomolding has jumped in price by 15 percent so far this year. HDPE powder cost about $1.03 a pound in February. On Aug. 11, it was about $1.18.
“This is the worst it's been in my 36 years in plastics,” said Carl Claerbout, president of Dutchland Plastics Corp. in Oostburg, Wis.
Plastics News certainly has written about the struggle by processors to pass along higher costs to customers. But these current resin price hikes have been so extraordinarily rapid-fire, and large, that their impact is becoming a black cloud over the plastics industry.
Last month, during my trip to Wisconsin, executives at rotomolders Dutchland and Darien-based Plasticraft Corp. spelled out just how pervasive the resin prices have become.
Claerbout stood on his factory floor, where kayaks and other large parts piled up. Dutchland's philosophy always has been to act as the customer's warehouse, to build parts ahead. By continuously becoming more efficient, officials reasoned, the firm could afford to do that.
But now the inventory — basically, resin molded into shapes — is worth a heck of a lot more money than it was just a year ago. That's pinching the profit margin, Claerbout said.
Plasticraft Matthew Bushman called the pounding of resin price increases “really a burden” for daily operations. Explaining what's happening to customers takes a lot of time and energy.
“Even though it's to the point … where we have no option but to pass on the increases — because we won't be here if we don't — we still have to have the discussions to make sure we're setting the appropriate path with that individual customer to the future,” Bushman said. “We hope it doesn't sap up too much of our energy, so that we lose focus from where we're going.”