Remember when you could toss cases of deli containers into your monthly supply order without thinking twice? Now, the cost of your deli salad containers has changed since last year. This was supposed to be easy, fun, and profitable. Your usual markup calculations aren’t catching why. The culprit isn’t just inflation; it’s plastic resin price trends. But why? Are you supposed to be a chemistry professor to figure this out?   

At Inline Plastics, we have seen how various factors can influence the cost of the resins needed for packaging for our customers and want to share what we have learned. 

In this article, we will guide you through the types of existing resins and what factors affect their costs from formation to delivery. Don’t worry, we won’t be super-science-y. By the end, you will be more informed about what drives these prices and be able to make smart decisions when buying plastic packaging.   

What Are the Different Types of Plastic Resins? 

Simply put, resin is a sticky substance that comes from plants such as amber (remember Jurassic Park?) or made artificially. It’s often used to make things like plastics, varnishes, and adhesives. Think of it like a thick, gooey liquid that can harden into a solid, making it useful for a variety of products.  

Artificially made resins are also known as “synthetic resins.” These are man-made and often derived from petrochemicals. a close-up of a molecule

The building blocks for plastics come from byproducts of oil and gas refining — materials that would otherwise go unused. These byproducts are heated and broken down into smaller molecules, like tiny LEGO pieces. These pieces are then linked together into long chains, creating plastic. The plastic is cooled and cut into pellets or sheets, ready to be transformed into everyday items like food containers, toothbrushes, and toys. So while plastics do use fossil fuel byproducts, they’re not driving fossil fuel production — they’re making use of what’s left over. 

The most common types of synthetic plastic resins used to make food packaging include Polyethylene (PE), Polypropylene (PP), Polyethylene Terephthalate (PET), and Polystyrene (PS). To prevent tongues from getting tied, we will just stick with the acronyms. 

Factors That Influence Plastic Resin Costs 

Plastic resin prices are subject to market change due to several ever-changing and interconnected factors. For example, according to a report by Plastics Today, the plastics industry faced significant challenges in 2023, with heightened operating costs and geopolitical uncertainties contributing to market volatility. We have identified nine key factors that can affect these prices

1. Raw Materials 

The cost of raw materials, including petrochemicals, significantly impacts resin prices. Fluctuations in oil prices can lead to changes in the cost of synthetic resins. Consider resins as the main ingredient in a recipe, like your store’s award-winning corn chowder. Should the cost of corn increase, so should the cost of your chowder for your customers. The same goes for the price of plastic resins.  

2. Supply and Demand Dynamics 

The balance between supply and demand plays a critical role in pricing. For example, an oversupply of resins can lead to lower prices, while strong demand can push prices higher. It’s like how gravy and stuffing might cost more around Thanksgiving.  

A clear glass sphere with a shadow3. Production costs 

Manufacturing costs, like energy, labor, and technology, can affect resin prices. Higher production costs typically lead to higher resin prices. Welcome to the domino effect: Plastic Edition.  

4. Regulatory factors 

Environmental regulations and sustainability initiatives can impact production methods and costs. Compliance with regulations may require investment in cleaner technologies, which can increase costs.  

5. Market Trends and Speculation 

 You see organic produce trending and prices changing with demand. Similarly, as customers want more eco-friendly options, resin costs shift. 

The seasonal ups and downs are similar to beverage sales, which are higher in the summer and lower in the winter. Like you might stock up on ice cream before a heatwave, plastic traders buy more resin when they expect shortages, driving up prices. Speculative trading also influences prices.  Expectations about future supply and demand can lead to price adjustments even before market changes occur. 

6. Economic Conditions  

Broader economic factors, such as inflation and changes in consumer spending, influence pricing. Economic downturns may reduce demand for certain plastic products, lowering resin prices.  

7. Import and Export Dynamics 

These logistical costs, including ocean freight rates, can raise resin producers’ costs. This can affect pricing in different regions. Port closings due to strikes, bad weather, and other factors can affect these dynamics. There are also tariffs and free trade agreements between nations when shipping is considered. 

8. Technological Advancements 

Innovations in resin production and processing can lead to cost reductions or increases. New technologies may improve efficiency, or sustainability could also require significant upfront investment.  

 How Resin Costs Affect Your Bottom Line 

We want to see your business succeed, so you must understand why knowing these factors is so important. Below are four critical reasons why this knowledge is powerful: 

1. Packaging Costs 

Plastic resins are the primary packaging material. Fluctuations in resin prices directly impact the cost of packaging for products like fresh produce and other goods.  

2. Operational Expenses 

Many grocery stores use plastic for in-store operations, such as plastic bags, containers, and wraps. Knowing the factors that influence resin costs helps store owners manage their operational budgets more effectively.

3. Supply Chain Management 

Changes in resin prices can affect the entire supply chain. If resin costs rise, suppliers might raise their prices. This would increase grocery store costs. Knowing these dynamics helps store owners negotiate better deals and plan for price changes. 

4. Competitive Pricing 

A magnifying glass on a graph: Photo by Anna Nekrashevich: https://www.pexels.com/photo/magnifying-glass-on-top-of-document-6801648/

Keeping prices low is essential in a competitive market. Food brands, retailers, and processors can better manage pricing by anticipating changes in resin costs. This will help them stay competitive. You might be the most valued supplier of grocery items in town, but remember that other stores exist in the market. 

It’s Time to Let This All Resin-ate  

The world of plastic resins – the raw materials used to make that packaging – constantly shifts based on various market forces. 

To make good choices about your plastic packaging, understand what drives these changes. Keep an eye on the costs of raw materials and how they fluctuate. Pay attention to both global and local economic patterns that could affect prices. And remember that certain times of the year may bring higher costs, so plan your packaging needs accordingly. 

Packed with this knowledge, you can approach your plastic food packaging purchases more strategically, potentially saving money and avoiding supply chain headaches. 

Do you want to learn more about plastic food packaging and what else influences pricing? Feel free to contact us with any questions you have on your journey! We’re here to help! 

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