Plastics processing companies suffer from rising oil prices

With the continuous rise in international oil prices, prices of plastics, the main raw material for plastics, such as polyethylene, have doubled. From the refining of crude oil to the process of becoming polyethylene raw materials, businesses have successfully pushed the pressure of price increases to the next family. Plastics processing companies, but plastics processing companies can not raise product prices in a timely manner, the price increase costs will be passed on to the final consumer. According to the “Foshan Daily” report, polyethylene has now risen to 14,000 yuan from more than 7,000 yuan per ton at the beginning of the year. In the Lecong plastics market, a row of plastic sales shops, polyethylene bags and other plastic materials stacked a bag, high barriers, and large trucks will be a plastic car bag to remove the vehicle. A person in charge of a plastics company said that the impact of rising plastic raw material prices on them was not significant, and how much the purchase price went up, how much they added on the basis of the original selling price, and profits remained unchanged. The plastic products manufacturers who purchase them here do not object to the price, because everyone understands the market conditions. The person in charge said that the money to buy one ton of plastic raw materials now can buy two tons at the beginning of the year. Plastics companies look a bit helpless. Some plastic manufacturers say that plastic prices have skyrocketed as raw material prices make it necessary for them to raise prices. However, it is not possible to quickly transfer all of the rising prices of raw materials to the lower reaches of the body. The ultimate result can only be self-digestion by enterprises and the reduction of profits. A person in charge of a plastics company producing artificial leather and film in Foshan said that after plastics prices rose, some measures were taken in terms of product production and management, but the recovered losses were only the tip of the iceberg; because of fear of losing the market, the price of final consumer goods was increased. Many companies have also exercised great caution. The bitter fruits of raw material prices can only be slowly digested. According to the current market, the increase in the cost of a year is at least a million. The boss of a production lighting company said: “This is my life. The price of steel has doubled in eight months, and the price of plastic has doubled. It is terrible.” It is reported that in order to avoid rising prices of raw materials, In response to the impact, some companies began to eliminate low-margin products and intended to convert to high-value-added products. On the other hand, they reduced capital pressure by selling inventory products as much as possible. Even some companies start to no longer accept low-profit orders. Some companies have to adopt a zero-inventory strategy and buy as many raw materials as possible to reduce the cost pressure. According to analysis by industry experts, the rise in prices of organic chemical products is synchronised with international crude oil prices, and will be further transmitted to the downstream industrial chain, leading to rising prices of industrial intermediates such as plastics, rubber, and chemical fiber, and downstream processing and manufacturing companies’ plastic products and rubber. Whether the prices of final consumer goods, such as products and textiles, will rise will depend on the market structure of these products. At present, the demand for plastic products, rubber products and textiles in our country is relatively stable and the supply is relatively surplus. The prices remain basically unchanged. On the whole, these companies have certain difficulties in passing product costs. The price increase of products is very limited, and it is difficult for companies to pass on the cost downwards. Self-digestion is the main measure to cope with rising costs.

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