The Ukraine crisis could lead to higher resin prices in North America and other parts of the world, according to market watchers contacted by Plastics News.
Russia launched a military attack on neighboring Ukraine on Feb. 23, sending global commodity prices up, even as financial markets tumbled. As of 11 a.m. on Feb. 24, West Texas intermediate oil prices were up almost 6 percent to more than $97 per barrel. U.S. natural gas prices also were up almost 3 percent to more than $4.60 per million British thermal units (BTUs). The Dow Jones Industrial Average was down almost 600 points — or almost 2 percent — in the same time frame.
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.
"By introducing severe uncertainty into world oil markets, the Ukraine situation will potentially underpin some resin supplier efforts to push price increases on the basis of higher energy prices," market veteran Phil Karig said in an email. Karig is managing director of Mathelin Bay Associates in St. Louis.
"The key question is how long geopolitics will hang over the market," he added. "A short conflict in Ukraine is unlikely to overwhelm our domestic supply/demand resin fundamentals for long. A longer conflict accompanied by escalating sanctions on Russia and Russian counter moves in a back and forth fashion could move the world and resin markets into situations that are difficult to predict."