What Does The Oil Market Rout Mean To Plastics?

What does the global rout in oil prices mean for the plastics industry?

The price of a barrel of Texas Intermediate crude nosedived to $67.17 Friday, the lowest level since May, 2010.

  • There will be pressure on all plastics prices, particularly the always volatile commodities, and particularly polyethylene, which is highly affected by the boom in natural gas created from hydraulic fracturing. PE producers have thumbed their noses at their customers and the health of the market for more than a year, registering record profits while hiking prices as feedstock costs have dropped. The crash in oil prices in the past week puts such a glaring spotlight on their greed that bargaining power should start moving to buyers — and staying there a very long time.
  • The argument for bioplastics, particularly those that compete directly with the polyolefins is getting really, really tough to make– unless they bring unique performance characteristics to the market, such as polyamides made from castor oil. It’s often stated that most bioplastics require oil prices to be $90 a barrel or higher in order to stay competitive. With oil below $70 a barrel–and still plunging–the case for plastics made from renewable resources is disappearing, if not gone. There are better, more direct ways to attack climate change issues anyway. With bioplastics at less than 1 percent of the global market for plastics and the carbon argument often dicey, the impact of bioplastics on climate change has been remote.

About Doug Smock

Former Chief Editor at Plastics World and Senior Technical Editor Design News

Injection Molding

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