The market for plastics and resins continues to be somewhat confusing, operating under very different market conditions as compared to other raw material commodities. Though resin producers have learned the value of managing capacity to stabilize (and potentially to increase margins), the way they’ve been building up inventories is puzzling, even in the face of steady and increasing demand. The fact that producers were pushing for price increases as of August indicates that they anticipate increasing demand, decreasing capacity, or a combination of both, and have some confidence of realizing higher prices for their products. After Hurricane Harvey, demands for increased pricing have only strengthened as stockpiles are drawn down and infrastructure restarts are slower than hoped for.
What can you do to keep up with these continually changing trends?
Be responsible for your own defense.
The best defense for a small manufacturer is to have multiple sources of resin pre-validated in your manufacturing process and pre-approved by your customers. This allows you to seamlessly shift from one supplier to another if faced with an unpalatable pricing demand. Be prepared to play suppliers against each other to ensure they remain in a reasonable margin band as market conditions vary, and don’t seek to take advantage of any hurdles you face in changing suppliers.
Watch pricing demands and industry stockpiles.
Overall, pricing seems to be steadily trending upward. If demand continues to strengthen, and/or if producers take capacity off line for any reason, expect upward pricing pressure to strengthen, regardless of significantly increased inventories. Keep watch on the status of producer capacity in the Gulf region, as refineries work to bring plants back online and get approvals, especially in the wake of the Arkema chemical plant fire caused by Harvey. Given the reality that Gulf production and transportation infrastructure is coming online slower than anticipated, expect upward pricing pressure to continue.
In the short term, avoid spot buys if possible, particularly east of the Mississippi.
As an important aside, anticipate true spot purchase pricing to increase faster, as buyers may be required to make more truckload-sized or smaller spot purchases in response to rail transport woes east of the Mississippi. Those problems are largely the result of shareholder activist demands for operational changes at CSX, and are likely to continue for several months. This will serve as another factor pushing resin prices upward, particularly in the Midwest and on the Eastern Seaboard. Additionally, given the reality that recent natural disasters have profoundly impacted pipeline operations, refining, LNG, and resin feedstock production originating in the Gulf, expect that to be leveraged as even further justification for resin price increase attempts, especially for spot buys.
Industrial commodity pricing for plastic resins is in a state of flux, with producers both seeking price increases while building historic stockpile
Hurricane Harvey solidified moves to increase monomer and polymer resin pricing, and set the stage for a tight market in the near term
Price pressures will be sustained as producers work to bring capacity back online and transportation infrastructure coming out of the Gulf remains challenged
Prepare now to contain cost pressures from suppliers and to seek price increases from customers
One remarkable thing about the list is that it rarely changes. The order may change but the top cited standards typically don’t change. Top 10 Sited Safety and Health Violations: 501 - Fall Protection 1200 - Hazard Communication 451 - Scaffolding 134 - Respiratory Protection 147 - Lockout/Tagout 178 - Powered Industrial Trucks 1053 - Ladders 305 - Electrical, Wiring Methods 212 - Machine Guarding 303 - Electrical, General Requirements Three of the 10 sited standards are directed at the construction standard (1926) while other fall within the general industry (1910). It should be noted however that the general industry standard also has fall protection guidelines. Year after year, inspectors see the same on-the-job hazards, any one of which could result in a fatality or severe injury. More than 4,500 workers are killed on the job every year, and approximately 3 million are injured. By understanding these regulations you can improve your safety program and prevent injuries. Give me a call if you have any compliance doubts, or want to review OHSA regulations. Gwido Dlugopolsky at 216-391-7766 or email@example.com
Why does it take a NASCAR pit crew only 15 seconds to change four car tires when it takes people like you and me minutes? The answer is simple SMED. Single Minute Exchange of Dies, or SMED, is a process for reducing the time it takes to do equipment changeovers. Using the principles of SMED you should be able to perform any changeover in your facility in under 10 minutes! The SMED process is simple – convert as many changeover steps as possible to “external”, meaning they are done while your equipment is still RUNNING, while simplifying and streamlining the remaining steps. SMED is broken down into the following 3 Steps: Separate Convert Streamline We found this article to be very helping in explaining the SMED process in more detail: LEAN PRODUCTION - SMED A good first step to achieve this level of SMED efficiency would be to run a kaizen event at your facility to standardize (5S) your tools and supplies. Doing this alone will help you achieve 40% to 50% greater efficiency. Once the “low hanging fruit” is gone, you can still reduce setup times another 20% by practicing more advanced SMED principles.
The secret to closing any sale is to reduce uncertainty in the buyer and replace it with confidence in YOU, your PRODUCT/SERVICE, and your COMPANY. Step 1 – Confidence in YOU Someone buying from you wants to be able to fundamentally connect with you on a human level and feel confident that you’re an expert in what you’re selling If you’re selling paperclips, be an expert in paperclips If you’re selling design and engineering related services, be an expert in design and engineering related services Focus on addressing the problem, not the solution….MEANING you already know you have the solution, connect with the buyer by being an expert with the problem he/she is facing. Prove that you know the problem and all aspects of the problem like the back of your hand. Step 2- Confidence in the PRODUCT/SERVICE you are selling Someone buying from you needs to trust the product/service you are selling will solve their problem. It’s your responsibility to deliver a solution and the benefits associated with it. Basically you need to “Hit a Homerun” communicating this message. Tip – Use Success Stories: Share with the potential buyer examples of your product/service solving problems and delivering value for