Polymer prices are the result of a complex interplay of a variety of diverse elements.
The price of polymer is determined by a few key factors. These determining factors include:
- Monomer pricing (such as the price of Styrene, Propylene, Ethylene, Benzene, & C4).
- Polymerisation margins
- Planned and unplanned outages
- Market conditions (such as currency, short-term demand, short-term reductions in capacity, arbitrage of polymer, the supply and demand in South East Asia and China, & trade activity).
- Feedstock prices (including: oil, gas, shale, & naphtha).
- External factors (such as natural disasters, war, politics, changes in consumer markets, & geographical shifts in supply and/or demand).
As the above factors express, the price of polymer is an extremely complex result of multiple elements combining in complicated ways. Part of this complexity arises as the different factors listed above can influence each other in ways both predictable and unpredictable.
For example, an unpredictable natural disaster could give rise to a predictable political response. In turn, both of these changes to the external environment could then lead to fluctuations in polymer prices.
Universal, Eternal Drivers of Polymer Price
No matter what happens, the drivers listed above are likely to remain potent influencers of polymer price for an extremely long time.
Moreover, no matter where polymers are sourced, polymer producers and suppliers have to deal with the same costs. For example, the cost of raw materials such as oil and gas will always be a key driver for all of the polymers from which they derive (which is essentially all of the most common polymer groups). Thus, these drivers are, for all intents and purposes, both universal and eternal.
Examples of Price Fluctuation
Any of the given factors as listed above can influence the price of polymer at any given time.
For example, a sharp increase in the short-term demand for polymer can quickly affect polymer prices as an increase in demand reduces the supply available. As with anything in a free economy, a reduction in supply coupled with an increase in demand means only one thing for prices: they go up.
An even more simplistic example would be an increase in polymer precursor prices leading to an inflation in polymer prices. Intuitively, if the price of the raw materials from which a product is derived go up, so too does the price of the product itself.
This is why, unfortunately, price rises have to be passed on down to the next party in the supply chain – as each level will rarely just absorb the rising costs at their own expense.