North American plastics processors have been dealing with extremely volatile resin prices in 2021. Polypropylene is up 68.5 cents per pound since December, most polyethylene grades are up 43 cents, and the list goes on. So who's absorbing the increases?
The quarterly results of publicly traded processors give us a pretty good clue.
In the latest round of earnings calls, processor executives have been talking about the impact that higher prices have on their companies' bottom lines, and the financial analysts have been asking a lot of follow-up questions about resin pricing. It's become an interesting dance, with the financial folks trying to pin down specifics, but the processors are obviously aware that customers are listening, too.
The answers vary, and everyone wants to highlight that their company is good at purchasing. But the ability to pass along hikes typically lags by a bit. There's no hard rule when it comes to resin pricing — as readers are well aware. But the lag can add up to a lot of money.
In Pactiv Evergreen's call, officials said the lag last quarter amounted to about $30 million. That's on sales of $1.35 billion.
For Berry Global, prices were up more than $500 million last quarter, and the lag in getting increases from customers amounted to $42 million. That was on quarterly sales of $10.2 billion — and company officials were quick to say they expect to get that back next quarter.
The flip side of this, of course, is that when prices fall, processors will be expected to give back the increases just as fast as they took them — if not faster. Never a dull moment in resin pricing.