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Polymer Industry Updates: What's coming up in 2022...

Polymer Industry Updates: What's coming up in 2022...

By GAP Polymers Team - On May 9, 2022 13:21

2022 is a critical year in the polymer industry at all levels. The global polymers market size was expected to grow finally after the economic recovery from the pandemic, but the fortune favors the wind, as the war between Russia and Ukraine changed everything, which affects all the raw materials prices in 2022 first quarter. Here comes the critical question: “what’s coming up in the rest of 2022?”

In this article, we will connect the dots to know how far the global plastic market has been affected by current circumstances, how the resin product prices change by the new factors in this dynamic market, and how the polymers price volatility will affect the supply and demand movement over the short and the long term.

Polymer Industry Updates In 2022

The war between Russia and Ukraine causes supply and demand interruptions, damages polymers consumer sentiment, which could be great effect on any industry especially the plastic industry that basically depends on oil prices. First let us see how leading petrochemical companies deal during the war:

Shell  decided to exit all its Russian operations for instance its major liquefied natural gas plant.

LyondellBasell will turn down new opportunities and plan to discontinue existing business with Russian entities.

BASF & DOW contribute to help meet humanitarian associations needs for the people of Ukraine such as the red cross.

ExxonMobil plans to exit its operations in Russia.

When it comes to the war effect on the resin prices, polymers suppliers and distributors had to learn a valuable lesson as the resin prices will continue to rise at a reasonable rate unless the demand destruction is hit by surprise circumstances such as the war and the pandemic.

The United Nations conference on trade and development remarked that if those high rates remain elevated through 2023, the global import price levels could rise by 10.6%, which can affect the islands that rely on imports that arrive by sea, and this also affects the final price of low-value-added products, and the final prices of products such as computers will be affected by these higher rates.

In the rest of 2022, the resin and materials production will continue at a higher rate, the product output will increase approximately 1.8 %, and Mold production is expected to rise 3.4%.

Latest Plastic Industry News

When it comes to the latest news in the plastic industry, no sound is louder than that of the battle between Russia and Ukraine, and If you want to know the real effect of the Russia-Ukraine war on the plastic industry, you should consider these critical points:

  • Russia was the largest supplier of natural gas and oil to the European Union, and it is the largest exporter of energy, natural gas, and hard coal.
  • Statistics suggest that Russia exports around 2.4 million polymers tons per year, which is a big volume.
  • Ukraine is a huge provider of chemical products, raw materials, and machinery such as transportation equipment.
  • Ukraine’s currency began to go down which will increase the cost of their exports.

Now let us see the war effect on the plastic industry:

  • According to CNBC, Oil prices hit their highest level for more than seven years, and crude oil prices represent an increase of more than 20% this year.
  • The average annual price Brent crude oil jumped to 113 U.S. dollars per barrel. It is considered as the highest level since June 2014. The reason is the continuous difficulties in payments and shipping.
  • War can increase supply chain disruption, which would not heal yet from the pandemic.
  • The manufacturers have a strong fear of harm, as there might be a shift in demand from plastic to other raw materials because of the lack of confidence that the consumers have.
  • If the war leads to further market distortions from the Russian side, the market will look toward Emirates, Kuwait, and Saudi Arabia, as one region’s loss may well become another locale’s gain.

Only a few months have passed since the war started, so its effects are still immeasurable.

Shipping becomes more complicated after Shanghai lockdown that exposes global supply chain strains

The IMF (International Monetary Fund) that global freight added 1.5 percentage points to this year inflation forecasts because of the Russian Ukrainian war, and shanghai lockdown also increases supply chain disruption. Shanghai extended restrictions on many parts of the city In April. Worth mentioning that Shanghai is one of the busiest ports and it is considered as home to China’s financial hup.

As plastic industry tried to recover from the war impact. This new crisis had escalated supply chain crisis. The coastal city restrictions increase transportation costs further after they imposed lockdown on its 24 million residents because of Corona virus positive cases.

The supply chain disruption continues to close shipping channels which affects the plastic resin distribution as plastic being warehouses on pallets to await export. That causes increase in plastic resin prices by increasing the cost of shipping.

 

Product Updates in the Plastics Market

This year witnessed a strong demand for propylene, and polypropylene supply has delayed matching the market demand, especially in western Europe and North America.

As a result, the race between propylene supply and demand will continue in the rest of 2022, because demand will continue to grow more quickly than supply, and for the next 4:5 years the global propylene demand is expected to continue.

Let’s take a deeper look at the plastic resin prices as we will refer to the second fiscal quarter and the next two quarters:

Prices have been affected by the spike in the crude oil global prices because if the Russian Ukrainian war.

  • PE & PP appeared to have bottomed out:
  • Polypropylene prices decline in January, and increase in February, and were likely to be flat to higher in the next few months as PP supply is still tight.
  • PS & PET prices were to way up: Polystyrene prices increased in February because benzene prices get higher. PET prices increased in February and will increase in the next two quarters because of the higher feedstock costs and resin supply disruption.
  • PVC & ABS prices witnessed decline: PVC prices dropped in January and February and PVC suppliers aim to increase prices because of feedstock cost hikes. ABS prices were flat in the first quarter, and it is expected to move down as ABS imports will hit the market in this quarter.

According to recent research:

The HDPE (High-Density Polyethylene), PVC, and PET (POLYETHYLENE TEREPHTHALATE) (POLYETHYLENE TEREPHTHALATE) PRICES are expected to increase in the following years. 

The future of the plastic industry GAP (Global Advanced Polymers) Polymers In 2022

The future is already here in GAP polymers, as we aim to sell 1 million tons of polymer material globally by 2030 while being the top distributor in Africa.

We try our hardest to build strong strategy by delivering unique value to our customers. “We put ourselves in our customers’ shoes”, that’s why we are not only offering customer after-sales service but also technical service to ensure that our clients are perfectly dealing with our raw materials.

Expansion

We have been successfully developing our 6 branches, and in 2022 we are expanding in new plastic markets such as North Africa.

New products

We are also looking forward to supplying our customers with new products such as recycled plastic.

Customers’ relationship

GAP Polymersalso wants to enhance the relationship with our customers to be a long-lasting relationship by laying our valuable fundamentals such as integrity in business, providing quality in the supply process, flexibility, teamwork to ensure that our customers are highly satisfied.

We hope that our brief newsletter has given you economic indicators to anticipate how the polymer industry will deal with global crises such as the pandemic. How war will affect the prices of the products.
 

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