In the past two months, the volatile resin market has impacted raw materials, plant operations, and logistical delays. Though the extent of the impact has not yet been fully defined, I am providing this notification to make you aware of the situation as we continue to monitor it.
We have seen a rapid escalation in resin and metal costs affecting the full range of products across the industry. Costs for many of the materials and supply resources have increased more than 10%-15%, well above normal inflationary changes, and may increase more in March.
Some factors impacting this increase include:
- High demand and continued supply issues for the propylene market
- Reduction in capacity at the FCC units converting petroleum for eventual conversion into polypropylene.
- Anticipated 10% reduction in capacity by mid-2021 for planned maintenance.
- Ongoing and additional declared Force Majeure over the few months resulting in resin allocation.
- Weather-related power and water outages
- Recently, adverse weather conditions have impacted Gulf Coast and Mid-West suppliers causing some plants to declare Force Majeure.
- Material inventories at the lowest reported levels in over 25 years
Therefore, we expect to see price adjustments outside of the usual resin and/or material adjustment period to incur during the next few weeks. Our sales team will continue to provide updated information on how these factors may impact our customers directly as we move forward. True to our commitment I have included a letter from one of our core suppliers.
As always, we appreciate your business and continue to take steps to mitigate the impact.
Sincerely,
Gary M. Burns
President & CEO