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View Full Version : Plastic prices should fall now......right?



Scott Shepherd
10-06-2008, 8:58 PM
We all got those new price lists for plastics several months ago with substantial price increases and a nice little letter from the CEO telling us how they had no choice. During those price increases, the price of petroleum was the reasoning behind the need for price increases. So with a barrel of oil dropping over 40% in the last few weeks, anyone care to take a bet on whether or not we'll get the new "price reduction" letter from all the CEO's of the plastic companies, telling us how they can now cut pricing back to the pre-increase rates?

I'm pushing my chips all in that we'll see no prices return to the pre-petroleum increase, even though the petroleum prices are back to those levels.

Anyone else care to wager? :rolleyes:

First company to do so gets all my business!

Doug Griffith
10-06-2008, 9:41 PM
Pricing is also a result of demand. If the economy is in the slumps, less plastic will be manufactured thus the demand will be higher and prices will follow. Hopefully competition will drive prices down as raw materials from petroleum gets cheaper. We'll see.

No wager from me,
Doug

Rodne Gold
10-07-2008, 1:18 AM
If demand drops , there is oversupply , prices should drop........thats why oil dropped.
Profiteering will take its toll tho , it's unlikely you will see a price drop in the near future.
What I am more worried about is global recession and the impact on sales. If there is less money around , folk spend less on non essential things such as lasered gifts , plaques etc and industrial and promotional work drops off.....bad for us all.
Folk here in SA , relatively isolated from the worlds woes are in financial crisis and we can see it in our turnover and profitability.

Doug Griffith
10-07-2008, 9:16 AM
If demand drops, there is oversupply , prices should drop.......

From my conversations with people deep in the trenches, plastic is manufactured (extruded) on demand. Large manufacturers order it by the hundreds of tons and then receive it a month or so later. Smaller manufacturers, distributors and guys like us get the left overs and filler. In other words, plastic manufacturers don't produce on speculation. A company I'm partnered with uses around a million pounds of ABS a year and is still having problems with supply (and pricing) because the order poundage is still too low. Acrylic (cast at least) is a whole different animal and may not be driven the same way.

Cheers

Joe Pelonio
10-07-2008, 9:23 AM
As demand drops off due to the lower spending on awards and other laser items, we should all be raising our prices so that we can keep our profits the same! :rolleyes:

Scott Shepherd
10-07-2008, 9:52 AM
Keep in mind, none of those nice price increase letters mentioned a supply and demand issue, they mentioned the pricing were going up due to petroleum prices.

Larry Bratton
10-07-2008, 1:21 PM
Keep in mind, none of those nice price increase letters mentioned a supply and demand issue, they mentioned the pricing were going up due to petroleum prices.
Prices should go down, if a companies selling prices are based on replacement cost. Most though use accounting methods like FIFO ..First in First Out etc to determine sales price. So, until new inventory comes in at a cheaper price, the seller would probably hold the line until competition forces his prices down. The oil prices you are seeing at less than $90.00 are 3 month futures prices, in other words, you could actually buy a futures contract at 90 and if you didn't sell it before the time was up, guess what, a big tanker of oil would drive up in your yard and you would own it at $90 a barrel. If, during that period, oil went back up to a 100.00 and you could find a buyer for the oil you had then you would make out well.
So, to say that plastic will go down in relation to oil..yes it should, eventually if it stays down and inventories come in at a cheaper price. The free market should see to that.

Michael Kowalczyk
10-07-2008, 1:42 PM
The one thing that all the posts above have missed is that the price of diesel has not dropped much (Diesel 4.29 versus regular at 3.05 in Houston) and that is one of the other main reasons we have all been nickle and dimed with increases (fuel surcharges) for the last year. And with heating fuel oil being next in line for big demand this winter, I do not see diesel dropping much since I have heard they are produced at the same refineries.

Big Business' are quick to raise prices and slow to decrease unless they need sales and their product is price driven. Sometimes it is better to lower your prices to break even and stay open when non-necessity $$$ tightens up. But that is a choice each business owner has to make on their own.

Bill Cunningham
10-07-2008, 7:23 PM
The Canadian dollar is back down to about .90 U.S. so I 'should' start seeing my exports to the U.S. start going up again.. That is, if anyone there has any money left.. My retirement savings plan just took a big wack in the last week effectively putting me (and many others) back to where I was in 2005.. So, I'm not expecting prices to go down for anything, anytime soon.. As People and businesses try and recover what ever losses they can, prices may very well go up...