SLP RESOURCES BERHAD

WHAT KIM SAY?

"Due to the rise in costs in the resin market, many manufacturers will be making another a 3 - 12.5% price increase again within the next month."

WHY I PICKED THEM AS A GEMS?

1. Spot resin market activity picked up the week of June. While domestic prime railcars remained mostly elusive, the flow of wide-spec offerings improved. Prices for most polyethylene (PE) and polypropylene (PP) grades were steady with a firm undertone, hanging at or near peak pricing for this cycle.

2. Though resin production has returned, and upstream resin inventories appear to be growing, pricing power remains firmly in the hands of producers. Good downstream and consumer demand are supporting elevated price levels, a now-familiar refrain. Most producers are still under force majeure conditions or have contract allocations in place, so upward pricing pressure continues. Producers are intent on implementing their June price increases and keeping the extraordinary rally intact. Even though most domestic PE and PP grades are difficult to source, so I feels that exports need to ramp up or else upstream resin supplies could begin to back up instead.

 

1. If you have been tasked with buying shrink film for your company, chances are, you have noticed that prices for many films and plastic packaging supplies have been slowly creeping up since at least September of last year. You may have also noticed that any resin-based plastic packaging supplies are also increasing in price as time goes on.

 

2. With the rise of global supply chain disruptions due to customer demand, the plastic resin market is preparing for multiple cost increases as we head into June. Additional price increases for various resin-based plastic packaging supplies are expected to occur over the next few months.

 

3. There have been multiple supply-chain disruptions (for example, extreme weather patterns) over the past few months, partly due to increased demand for these supplies. The global pandemic has also put excessive pressure on various elements of the packaging industry, which has compounded these issues.

 

4. Additionally, there have been cost increases for logistics and feed-stock requirements and continually increasing demand for plastic packaging products the world over. Feed-stock is the raw materials required to supply or fuel machinery or industrial processes.

 

5. With the demand for plastics worldwide continuing to increase with inventory levels being tight in many of the global resin markets, one thing is for sure.

 

6. Pricing power gives plastic packaging manufacturers an earnings boost. the sharp rise in resin prices has helped plastic packaging manufacturers defy expectations of a margin and profit hit from higher raw material prices, as cost increases have been successfully passed on to buyers.

 

7. Since late last year, resin prices have soared meteorically but instead of the usual margin squeeze, manufacturers in the sector have been able to pass on the raw material price increases by raising the average selling price (ASP) of their products.

 

8. Not only has global industry consolidation given plastic packaging players greater economies of scale, but robust demand for plastic packaging brought about by the pandemic and lockdowns across the world has placed negotiating power in their hands.

 

 

 

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