Plastic resin prices for the North American market increased in the last week of February due to geopolitical factors and the tariff threat
Polyethylene (PE) and polypropylene (PP) prices in the North American market increased half a cent across all segments during the week of February 17, according to Resintel, in its update from the Resinsights analytics platform powered by Plastics Exchange.
Over the past 15 days, PE resin saw the highest number of transactions, driven primarily by export demand. Meanwhile, US buyers reduced their activity as sellers sought to raise resin prices.
Resellers took advantage of alternative high-priced offers, holding onto older, cheaper inventory. However, they chose not to restock at higher prices due to uncertainty in short-term demand, according to Resintel.
Geopolitics Impacts Plastic Resin Prices
The US plastic resin market has been under pressure in the first few months of the year. Immediate resin availability was limited, although the last week saw increased supply of domestic rail cars.
According to the Resinsights report, this could indicate that buyer resistance is holding back material at production levels, which in turn encourages more spot sales.
Factors keeping resin manufacturers on their toes include:
- Geopolitical conflicts on the rise
- Pending and potential tariffs
- Logistical constraints
Low demand and tariffs create uncertainty
Weak demand for resins in Europe has been exacerbated by uncertainty over US support for Ukraine, forcing industry players to remain agile in their business decisions.
In addition, the postponement of Mexican and Canadian tariffs is set to expire on March 4, while new tariffs targeting the automotive, semiconductor, and pharmaceutical sectors could be implemented in April.
While these tariffs could encourage reshoring and strengthen demand for domestic manufacturing in the United States, they could also generate more rigid inflation, leading the Federal Reserve to reconsider interest rate cuts, affecting the cost of credit for new investments and expansions.
International Tensions and Their Impact on Resin Costs
Increasing sanctions and pressure on Iranian and Russian oil exports are affecting the economies of these countries, but they are also raising energy and raw material costs for China, whose economy remains unstable.
This scenario could disrupt global trade flows, affecting shipping rates and equipment availability, key elements in the plastic resin supply chain.