Here we go again. Commodity grade PP dropped .14 / lb. and planning on going down another .08 – .10 in November. We have seen this many times over the past five to seven years and what have we learned:
- Recycling materials lag prime and it usually takes 2- 3 months to catch up. Mitigate your risk with monthly price reviews and look at his as a true partnership through all markets, steady wins the race.
- We find out who the real business people are in this market and who the shady ones are that give scrap a bad reputation. If you are having processing done outside, keep an eye on your materials and ensure your feed streams are consistent and the same. We have seen many times where processors cut corners and substitute cheaper materials into the formulas, cut corners, steal, and increase “shrinkage” in the processing. Keep aware of your materials and volumes.
- It is a great time to secure feed streams. The market is flooding with good materials, which is good for green applications to secure an ongoing steady stream.
- Using densified material is a good idea to supplement the higher cost pellet, there is great material out there and if feeds well for injection molders. In general, keep your options open on recycled plastics and forms.
- Retailers will always be knocking when the market dips or free falls even though the materials were planned months ago. Ensure you have a good supply chain and communication plan in place.
- The formula is everything; if you do not have the right formula that is constant and works, it won’t matter what material you have and not everyone can recycle plastic well.
- We are seeing quite a bit of manufactures explore other plastics that are more stable than the PP market.
The best practice is to put a stable program in place that monitors all of this for you and keep you stable in all markets and ensures you constantly have an ongoing feed stream for your applications. Be aware of market conditions and ensure you have a good communication plan in place with suppliers and customers.