The price of plastic: Taking control of raw material costs

Published: 29th Jan 2019

The price of plastics is volatile – not only because it depends heavily on the price of oil, but also because it’s affected by other market conditions.

For manufacturers using plastics, this can be a bottom-line headache; but, as Callum Macpherson, Head of Commodities at Investec explains, ways to hedge against price fluctuation are emerging.

Plastic is widely used in all sorts of products – whether that’s low-density formulations used for packaging or high-density plastic used for products like piping and plastic lumber.

In Europe, plastics are mainly produced from petroleum products and therefore the price of crude is one of the key factors that affect plastic costs, making it very volatile.

However, there are additional factors that can allow plastic prices to take on a life of their own, such as capacity constraints and stockpiling by users.

 

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