The state of Texas, known for its sunshine and sprawling deserts, experienced some of its coldest weather in 30 years this past February. Temperatures in this notoriously sunny state plummeted to 0F, and power outages caused by Arctic-like weather threw the state’s manufacturing industry into disarray.
Refineries located in the Gulf Coast were greatly impacted, causing considerable issues for the US polyethylene (PE) and polypropylene (PP) production. PE and PP, the main components of resin, are used for the creation of items like pop-tops and other plastic containers. Because these materials are such an integral component of producing containers, the effects of this event will be felt heavily throughout the packaging industry.
Roughly 80 – 85% of all PE and PP production came to a screeching halt in February, and around 162MM lbs of product have been lost per day. In addition, challenges caused by the extreme weather in Texas have forced restrictions on the movement of goods. This has caused transportation to remain at a stand-still.
Resin was already scarce before this incident, and extreme weather conditions in Texas have exacerbated the issues with this vulnerable industry. The culmination of these problems will lead to severe plastic shortages, and production may not return to its normal operating capacity for at least six months. With demand drastically exceeding supply, resin prices have climbed about 8 cents per pound and are facing another price increase of $0.07-0.09/lb in the coming weeks.
What does this mean for the packaging industry?
Overall, PE and PP production has lost 1-2 weeks of supplies following the aftermath of the extreme weather in Texas. Complications in this industry will make the material harder to source, and the procurement of this good more difficult for the foreseeable future.
While the supply chain attempts to catch up, the Resin Industry will take time to return to normal. As manufacturing companies continue to weather this storm, consumers can anticipate the packaging industry to face difficulties as well. Packaging prices will be higher and lead times will be uncertain due to the problems caused by the unprecedentedly low temperatures across the southwest.
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