Cheap plastic bags again! … but from Iranian oil?
Business all over the world is in a tailspin. Not only are there core economic issues, low consumer confidence and so forth; now world oil prices are going down. But is cheap oil a good thing? If you are on a budget it is; if you are investing in drilling platforms, maybe not. But drilling isn’t today’s topic.
The integrity of American small business is once again going to be tested in 2009 as a result of falling oil prices.
Asian plastic converters in China, Vietnam, Malaysia, etc. have been purchasing North American plastic resin since 2007. Because our resin is natural gas based, it has been cheaper for them to use American resins since foreign oil was high. But as oil prices drop Asian refineries are tooling up again looking to produce their own plastic resins. We also think this will continue since the forecasts for crude oil on world markets are expected to continue dropping well into 2009.
As the supply of American plastic resins increases because we are not exporting it to Asia, the cost of American-made plastic resin will go down as well. What I am saying is good news for a change… plastic products including retail bags are likely to go down in 2009 on all fronts foreign and domestic.
But keep in mind that American produced plastic resin for retail bags and other items is made from a byproduct of natural gas. Asian plastics are made directly from oil which is sourced from places like Iran, Venezuela, and Russia as well as other nations.