Materials firms are seeking exits from some business in Russia while industry watchers are warning of higher resin prices as a result of the ongoing attack on Ukraine.
Plastics industry veteran Peter Schmitt said that as a result of the crisis, pricing for plastic raw materials "will continue to skyrocket." Schmitt is managing director at Montesino Associates LLC in Wilmington, Del.
"The oil and gas increases will damage producer margins as they desperately try and pass cost increases through to customers, and the elevated pricing will damage demand," he said in an email.
"If natural gas gets tight, it will create challenges for polymer production in Europe. "Then one polymer alternative, aluminum, is already extremely tight, not to mention other minerals such as magnesium. None of this bodes well for the [hopefully] post-COVID supply chain."
Russian forces invaded Ukraine Feb. 23, and while their progress has been slower than initially expected, they have taken over some major cities.
Ukraine exports about 1.9 billion pounds per year of benzene — a feedstock used to make styrene monomer — and more than 1.6 billion pounds of PVC resin, according to the ICIS Supply & Demand Database. The country also imports more than 1.4 billion pounds of polypropylene resin and more than 1 billion pounds of PET per year.
Russia exports about 2 billion pounds of high density polyethylene and PP each year, according to ICIS. That nation also imports about 1.5 billion pounds each of HDPE and purified terephthalic acid (PTA), a feedstock used to make PET.
West Texas intermediate oil prices were near $113 per barrel in early trading March 4, up almost 23 percent since the Russian attack began. U.S. natural gas prices had bounced around and were up only about 2 percent in the same time frame as of March 3. The Dow Jones Industrial Average also had moved around but was roughly flat in the same comparison.
Higher oil and natural gas prices could have a macro effect on resin prices. Commodity resin prices that had been on an upward run since the start of the COVID-19 pandemic in early 2020 had finally started to come down in late 2021. The Ukraine crisis could change that trend.