RESIN MATERIAL PRICES INCREASE LEADING TO STRUGGLING BUSINESS 

Since the beginning of March, many resin manufacturing companies have had to inform their customers about price increases. The reason is the breakdown of the supply chain of plastic materials from the United States, Europe, and China.

This difficulty combined with the lack of empty containers for transportation has caused the cost of resin materials to go up strongly.

Resin price increases by over 30%

Many businesses have not dared to announce their operation plans for 2021 because raw material prices have increased rapidly from the beginning of the fourth quarter. This crisis is caused by the fact that up to 60% of plastic materials for domestic production are imported. Meanwhile, the production and transportation of resin materials in the markets where Vietnamese enterprises are buying goods are facing difficulties.

According to the Vietnam Plastics Association, Asia uses the largest resin materials in the world, but the local supplier only meets more than 70% of demand. The rest of the supply must come from Europe and the Middle East. However, from the fourth quarter of 2020, the supply in Europe and the Middle East has been interrupted due to delayed logistics activities. National lockdown orders or disease control rules have resulted in long-time trading, the shortage of empty containers becomes a serious problem, and transportation costs have also increased.

About the largest resin material supplier in Asia, China, there is another difficult situation. In February, many manufacturers in this country were off for holiday. This combined with the disruption of shipping activities in Europe and the Middle East has made the domestic resin material supply plummeted.

To deal with this situation, many domestic enterprises had to find alternative sources in Thailand and Indonesia. However, because of the scarcity of resin material supplies in the market, many businesses in these two countries have continuously increased their prices. Since the beginning of the year, resin materials suppliers in Indonesia have increased their selling prices 4 times. Resin material price on the market has increased by about 30% over the same period last year.

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Improve the product quality

According to Vietnam Plastic Business Association, the growth of the resin industry is expected to remain at 6.5% from 2019 to 2023. The two segments that account for the largest proportion in the value structure of Vietnam's plastic industry are plastic packaging and plastic construction, which are still expected to be the leader of the industry. So how to achieve this goal during the increasing resin material prices?

According to Mr. Le Tuan Anh, General Director of Cat Thai Production-Trading Co., Ltd., leading FDI enterprises often choose their material suppliers. These businesses are allowed to adjust the selling price of raw materials but have to follow the rule every 3 months. When the leading FDI enterprises accept the price adjustment of raw material suppliers, it means they have to adjust the purchasing prices. This will eliminate risk, increase product prices and fail to find buyers. However, in order to do so, businesses need to improve product quality to be able to join the global supply chain of large corporations.

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