Prices for resin continue to rise, with the impact being felt throughout the irrigation industry.
“Because resin makes up such a large percentage of the cost of irrigation products when resin prices increase rapidly manufactures, dealers, distributors and end users need to react quickly or business will suffer,” said Richard Restuccia, Jain Irrigation on JainsUSA.com.
In the last nine months, the price of resin per pound has increased 95%. In April 2020, the U.S. spot price for resin was $0.38/lb. Currently, the price is $0.74/lb. COVID’s impact on the economy and the uncertainty ahead for the world economy contributed to the low price last April.
“This rapid acceleration causes issues for anyone manufacturing plastic products or products packaged in plastic,” adds Restuccia. “Manufacturers without a process to increase costs as the resin price explodes to the upside will be challenged to operate at a profit.”
High prices can be attributed to the costly Atlantic hurricane season in 2020, where many significant manufacturers are located. Timing also affected supplies as prices, as several plants had planned “turnarounds” in 2020 where an entire part of the operation is taken out of production while the plant is inspected and revamped. At the same time, a surge in orders for resin from Asia caught most suppliers by surprise. In addition, a primary PE plant in Mexico shut down in December.
“This is important because the ocean freight prices put resin prices from Asia out of reach for Mexico, so they turned to the U.S. for resin, which caused supplies to get even tighter,” noted Restuccia.
In addition to high resin prices, the industry is hit hard with record historically high rates for containerized freight (up over 150% from a year ago), and spot truckload pricing hit an all-time high as well.
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