Skip to main content
Sister Publication Links
  • Sustainable Plastics
  • Rubber News
Subscribe
  • Login
  • Register
  • Subscribe
  • News
    • Processor News
    • Suppliers
    • More News
    • Digital Edition
    • End Markets
    • Special Reports
    • Newsletters
    • Resin pricing news
    • Videos
    • Injection Molding
    • Blow Molding
    • Film & Sheet
    • Pipe/Profile/Tubing
    • Rotomolding
    • Thermoforming
    • Recycling
    • Machinery
    • Materials
    • Molds/Tooling
    • Product news
    • Design
    • Mergers & Acquisitions
    • Sustainability
    • Public Policy
    • Material Insights Videos
    • Numbers that Matter
    • Automotive
    • Packaging
    • Medical
    • Consumer Products
    • Construction
    • CEO Issue
    • Diversity
    • Best Places to Work
      • 2022 winners
    • Processor of the Year
    • Rising Stars
    • Women Breaking the Mold
  • Opinion
    • The Plastics Blog
    • Kickstart
    • One Good Resin
    • BRICS and Plastics
    • All Things Data
    • Viewpoint
    • From Pillar to Post
    • Perspective
    • Mailbag
    • Fake Plastic Trees
  • Shop Floor
    • Blending
    • Compounding
    • Drying
    • Injection Molding
    • Purging
    • Robotics
    • Size Reduction
    • Structural Foam
    • Tooling
    • Training
  • Events
    • Plastics News Events
    • Industry Events
    • Injection Molding & Design Expo
    • Livestreams/Webinars
    • Editorial Livestreams
    • Ask the Expert
    • Plastics News Events Library
    • Processor of the Year submissions
    • Plastics News Executive Forum
    • Injection Molding & Design Expo
    • Plastics News Caps & Closures
    • Women Breaking the Mold Networking Forum
    • Plastics in Automotive
    • Injection Molding & Design Expo
    • Reuters Responsible Business Europe 2022
    • Reifenhäuser Technologies Livestreams
    • Polymer Points Live
    • Numbers that Matter Live
    • Plastics in Politics Live
    • Sustainable Plastics Live
    • Plastics Caps & Closures Library
    • Plastics in Healthcare Library
    • Women Breaking the Mold Networking Forum Library
  • Resin Prices
    • All Resins
    • Commodity TPs
    • High Temp TPs
    • ETPs
    • Thermosets
    • Recycled Plastics
    • Historic Commodity Thermoplastics
    • Historic High Temp Thermoplastics
    • Historic Engineering Thermoplastics
    • Historic Thermosets
    • Historic Recycled Plastics
  • Rankings & Data
    • Injection Molders
    • Blow Molders
    • Film Sheet
    • Thermoformers
    • Pipe Profile Tubing
    • Rotomolders
    • Mold/Toolmakers
    • LSR Processors
    • Recyclers
    • Compounders - List
    • Association - List
    • Plastic Lumber - List
    • All
  • Directory
  • Custom
    • Sponsored Content
    • Conair Sponsored Content
    • KraussMaffei Sponsored Content
    • ENGEL Sponsored Content
    • White Papers
    • Classifieds
    • Place an Ad
    • Sign up for Early Classified
MENU
Breadcrumb
  1. Home
  2. News
March 20, 2020 12:33 PM

Materials firms work to fortify supply chains despite coronavirus

Frank Esposito
Senior Staff Reporter
Plastics News Staff
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    Materials firms throughout the plastics markets are reacting to the coronavirus outbreak.

    In the last week, North American firms have shifted their attention from how shutdowns in China might affect their businesses to dealing with potential economic impacts within their own region.

    Most plants making resins, compounds and concentrates in North America are expected to remain open. Although many of these plants are large in size, their employee totals aren't very high by comparison.

    Even with the U.S. stock market down more than 30 percent in the past month, Dow Inc. CEO Jim Fitterling said in a March 16 TV appearance that he's optimistic about the U.S. economy's ability to recover because of positive signs from the Chinese market. Midland, Mich.-based Dow is one of the world's largest producers of polyethylene and several specialty plastics.

    "In the last two weeks, we've seen our demand in China bounce back," Fitterling said on CNBC's Mad Money show. "I think that tells us that we can see the same thing wash through the economy here."

    The impact of the coronavirus on global oil demand and pricing could lead to cuts at ExxonMobil Corp. ExxonMobil's chemical unit is a major global supplier of PE, polypropylene and specialty plastics.

    The global oil market also has been affected by price competition between Saudi Arabia and Russia. Crude oil prices are down more than 50 percent in the last month.

    Officials with ExxonMobil in Houston have said that the firm is looking to reduce spending significantly as a result of market conditions.

    "Based on this unprecedented environment, we are evaluating all appropriate steps to significantly reduce capital and operating expenses in the near term," said Darren Woods, ExxonMobil chairman and CEO. "We will outline plans when they are finalized."

    Like many North American PE makers, Dow and ExxonMobil have added large amounts of capacity in recent years because of regional supplies of low-cost shale-based natural gas.

    The coronavirus impact and lower oil and feedstock costs could have some unusual effects on resin demand, according to Blue Clover Polymer Solutions, a resin supplier and consulting firm in Princeton, N.J. Potential virus impact could drive up demand and prices for some materials while drastically reducing demand for others, officials with the firm said in a recent market update.

    Along with crude, prices for naphtha feedstock are significantly lower. Blue Clover officials said this is important for resin makers and consumers because most of Asia and Europe still produce their PE and PP from naphtha-based crackers.

    "Export markets out of the U.S. for PE (and even PP) will need pricing to move significantly lower to compete with cheaper Asian and European cost of production," they said.

    Polymer-grade propylene (PGP) prices also are trending down, although Blue Clover said that PP supplies had tightened in February and early March. "It's possible that for the spot [PP] product that does become available in March and April, pricing may move lower slightly on the heels of lower PGP pricing," they said.

    An example of a demand surge can be seen in PP used in fibers to make surgical masks, which now are in extremely high demand at medical centers around the world.

    "Converters than can increase supply of nonwoven PP for masks will certainly do so," Blue Clover said. "Others may be able to retrofit machinery to help with the supply. Producers of nonwoven PP will clearly attempt to run their reactors to maximize this product.

    "So when someone looks at the macro markets of the recession that is either already here or closely at bay and assumes significantly lower PP prices across the board, there are these huge pockets of demand," the researchers added. "That's what makes this supply/demand situation unique.

    "The lower demand isn't simply across the board because a financial bubble in housing or student loans popped. There are actual products that have seen incredible demand as a result of this outbreak and that will increase the price for the specific resin needed to make them."

    Dow Inc.
    Jim Fitterling
    Social distancing

    In the compounding market, Shuman Plastics Inc. has maintained normal operating hours even with the state of New York implementing strong safety measures. Shuman is based in Depew, N.Y.

    "We have abided by local government requests to improve social distancing for our associates by shifting as many as possible to a work from home arrangement," President Ken Shuman said in an email. "We continue to monitor the evolving situation and adjust our work practices to ensure the health and welfare of our team, our community and our business.

    "It's a delicate balancing act," he added. "It's imperative that we participate and contribute our share to this nationwide, and global, effort for humanity."

    Like many compounders, Star Plastics of Ravenswood, W.Va., has put safety procedures in place. Those steps include limiting nonessential business travel and face-to-face meetings, restricting facility access to company personnel only and implementing remote work among its sales and customer service teams.

    "As COVID-19 is changing the world around us, we believe as long as we all pull together, we will get through and come out stronger," president and CEO Doug Ritchie said in an online statement. "We are committed to the health and wellness of our employees, their families and the local community."

    He added that Star hasn't identified any disruptions within its supply chain and it is working closely with vendors to ensure production of its products.

    At the resin distribution level, firms also are monitoring coronavirus impact. Officials with M. Holland Co. of Northbrook, Ill., "are meeting frequently to assess and respond to COVID-19 with the twin goals of protecting our employees and ensuring a functioning supply chain for clients and suppliers," they said on LinkedIn.

    Most M. Holland employees are now working from home. The firm also has canceled all international travel, and domestic travel has been greatly reduced.

    M. Holland also has put a commercial mobilization team in place to assess changing market dynamics, both at the market segment level and at the account level.

    "Sales, market and product managers are providing daily updates, which will be used to ensure we have the right products in the right places at the right time," officials said.

    They added that there's some uncertainty in PE and PP resin markets because of both COVID-19 and the collapse of crude prices. Domestic order rates for PE and PP "remain healthy" as of the week beginning March 9.

    Further up the supply chain, M. Holland officials said that container shortages and space availability continue to cause ocean shipping delivery delays. Rates on some routes have doubled from pre-COVID-19 levels, but the collapse of oil prices has provided an immediate rate relief of 5-10 percent because of lower fuel surcharges.

    At Chase Plastic Services Inc. in Clarkston, Mich., officials on March 16 implemented a plan to allow its employees to work remotely for at least the next two weeks. "This decision was made to ensure the health and safety of our team, as well as to do our part as a private business to help thwart the advance of this virus," Operations Vice President Adam Paulson said in a statement on the firm's website.

    "Chase Plastics' business continuity team has been planning for this situation, or an unexpected event, for decades," he added. "We are prepared."

    Chase has been in contact with its supply base to ensure that there has not been a disruption in supply, Paulson said. To date, none of the materials it distributes are affected by the coronavirus outbreak.

    Paulson added that Chase has recently experienced some extensions of up to two weeks on lead times from suppliers with manufacturing locations in Asia-Pacific and Europe because of logistical limitations. As a stocking distributor, Chase is making the necessary adjustments to its stocking levels.

    RECOMMENDED FOR YOU
    Plastics adapt to a rapidly changing auto market
    Letter
    to the
    Editor

    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Plastics News would love to hear from you. Email your letter to Editor at [email protected]

    Most Popular
    1
    One-third of ExxonMobil shareholders back study on virgin plastics risks
    2
    Changes at the top look promising for Plastics Industry Association
    3
    Ford to use 20% recycled, renewable plastics by 2025
    4
    Rehau selling Russian operations as Ukraine invasion continues
    5
    Stellantis replaces North American purchasing chief amid supplier relations woes
    SIGN UP FOR TO RECEIVE THESE EMAILS AND ENEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Get our newsletters

    Staying current is easy with Plastics News delivered straight to your inbox, free of charge.

    Subscribe today

    Subscribe to Plastics News

    Subscribe now
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter
    • Instagram

    Plastics News covers the business of the global plastics industry. We report news, gather data and deliver timely information that provides our readers with a competitive advantage.

    Contact Us

    1155 Gratiot Avenue
    Detroit MI 48207-2997

    Customer Service:
    877-320-1723

    Resources
    • About
    • Staff
    • Editorial Calendar
    • Media Kit
    • Data Store
    • Digital Edition
    • Custom Content
    • People
    • Contact
    • Careers
    • Sitemap
    Related Crain Publications
    • Sustainable Plastics
    • Rubber News
    • Urethanes Technology
    • European Rubber Journal
    • Tire Business
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • News
      • Processor News
        • Injection Molding
        • Blow Molding
        • Film & Sheet
        • Pipe/Profile/Tubing
        • Rotomolding
        • Thermoforming
        • Recycling
      • Suppliers
        • Machinery
        • Materials
        • Molds/Tooling
        • Product news
        • Design
      • More News
        • Mergers & Acquisitions
        • Sustainability
        • Public Policy
        • Material Insights Videos
        • Numbers that Matter
      • Digital Edition
      • End Markets
        • Automotive
        • Packaging
        • Medical
        • Consumer Products
        • Construction
      • Special Reports
        • CEO Issue
        • Diversity
        • Best Places to Work
          • 2022 winners
        • Processor of the Year
        • Rising Stars
        • Women Breaking the Mold
      • Newsletters
      • Resin pricing news
      • Videos
    • Opinion
      • The Plastics Blog
      • Kickstart
      • One Good Resin
      • BRICS and Plastics
      • All Things Data
      • Viewpoint
      • From Pillar to Post
      • Perspective
      • Mailbag
      • Fake Plastic Trees
    • Shop Floor
      • Blending
      • Compounding
      • Drying
      • Injection Molding
      • Purging
      • Robotics
      • Size Reduction
      • Structural Foam
      • Tooling
      • Training
    • Events
      • Plastics News Events
        • Plastics News Executive Forum
        • Injection Molding & Design Expo
        • Plastics News Caps & Closures
        • Women Breaking the Mold Networking Forum
        • Plastics in Automotive
      • Industry Events
        • Injection Molding & Design Expo
      • Injection Molding & Design Expo
      • Livestreams/Webinars
        • Reuters Responsible Business Europe 2022
        • Reifenhäuser Technologies Livestreams
      • Editorial Livestreams
        • Polymer Points Live
        • Numbers that Matter Live
        • Plastics in Politics Live
        • Sustainable Plastics Live
      • Ask the Expert
      • Plastics News Events Library
        • Plastics Caps & Closures Library
        • Plastics in Healthcare Library
        • Women Breaking the Mold Networking Forum Library
      • Processor of the Year submissions
    • Resin Prices
      • All Resins
      • Commodity TPs
        • Historic Commodity Thermoplastics
      • High Temp TPs
        • Historic High Temp Thermoplastics
      • ETPs
        • Historic Engineering Thermoplastics
      • Thermosets
        • Historic Thermosets
      • Recycled Plastics
        • Historic Recycled Plastics
    • Rankings & Data
      • Injection Molders
      • Blow Molders
      • Film Sheet
      • Thermoformers
      • Pipe Profile Tubing
      • Rotomolders
      • Mold/Toolmakers
      • LSR Processors
      • Recyclers
      • Compounders - List
      • Association - List
      • Plastic Lumber - List
      • All
    • Directory
    • Custom
      • Sponsored Content
      • Conair Sponsored Content
      • KraussMaffei Sponsored Content
      • ENGEL Sponsored Content
      • White Papers
      • Classifieds
        • Place an Ad
        • Sign up for Early Classified