Bangkok: Prepare to pay more! There's a severe shortage of plastic pellets, causing prices to double. This is affecting everything from plastic shopping bags and food packaging to cosmetics nationwide.
According to Thai News Agency, the global plastic crisis is wreaking havoc as prices have skyrocketed by 100%, impacting the food chain and Thai SMEs. The Plastics Institute is urging the government to urgently control plastic stockpiles.
The plastics industry is currently facing a major "shock" as a direct result of the oil crisis and the war in the Middle East. This is because plastics are downstream products of the petrochemical industry, which uses crude oil and natural gas as feedstocks. Khongsak Dokbua, Assistant Director of the Plastics Institute, revealed a worrying situation: the price of some types of plastic pellets is rising faster than the price of oil.
Prices have doubled and global supply has dropped by 20% following the closure of the Strait of Hormuz and attacks on major plastics manufacturing plants in Qatar and Saudi Arabia. This resulted in an immediate 20% decrease in global plastics supply, causing prices to surge by up to 100%. A clear example is PP plastic, which jumped from around 30 baht per kilogram to over 60 baht per kilogram. Importantly, even with money, it's difficult to find because manufacturers have run out of stock.
Plastic pellets are used in almost every industry, especially packaging, which accounts for up to 40% of usage. The impact is already clearly visible in plastic shopping bags, with prices increasing by 7-10 baht per kilogram. This trend also extends to food packaging, snacks, instant noodles, cosmetics, automotive parts, and pharmaceuticals. These increased costs are causing some SMEs to struggle and force them to close down.
Thailand produces a large volume of plastic pellets, but prices are tied to the global market. Although Thailand has a plastic pellet production capacity of up to 10 million tons per year, exceeding domestic demand of only 5 million tons, the selling price is still based on the global market index. This prevents Thailand from selling at prices lower than the international market. However, the government has declared plastic pellets a controlled commodity to monitor stock levels and prevent price gouging.
The Plastics Institute is working with the Department of Internal Trade to promote the "Two Sufficiencies" measure, meaning that plastic pellets must be sufficient and not excessively expensive. Key recommendations include prioritizing domestic sales, expediting the allocation of plastic pellets to essential goods, and applying the oil reserve model to the plastics industry to ensure long-term stability.
A glimmer of hope in the short term is the recent agreement on a temporary two-week ceasefire in the conflict zone. This provides an opportunity for more crude oil tankers to access refineries in Thailand. However, the volume of ships entering the area may still not be sufficient to meet all demand. Therefore, operators must remain vigilant and manage existing resources efficiently during this period of high uncertainty.