Odd Lots Why the Price of Plastic Is Crashing After a Record Surge
Dec 26, 2022
Warren Russell, a Commodity Strategist at Bank of America, dives into the turbulent journey of plastic prices. He discusses the skyrocketing costs of polypropylene and polyethylene in 2021 and their subsequent crash to record lows. The conversation unveils the impact of supply chain disruptions, like the Texas freeze, on pricing dynamics. Russell also highlights the environmental challenges of plastic production and recycling, shedding light on the urgent need for sustainability in the plastics market as it navigates the changing economic landscape.
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Plastic Pricing Factors
- The primary feedstock for plastic production comes from oil.
- Other factors like production capacity and demand also influence plastic pricing.
Plastic Origins
- Various hydrocarbons, from viscous substances to natural gas, are extracted when drilling for oil.
- Plastics are derived from the lighter hydrocarbon chains like ethane, propane, and butane.
2021 Plastic Price Surge
- In 2021, hurricanes and the Texas deep freeze disrupted plastic production.
- This, combined with high demand due to stimulus checks, caused prices to soar.