Manufactures are experiencing the economic impact of the ongoing pandemic as prices of many raw materials rise above the base line inflation rate. One area under cost pressure is that of manufactured PVC products, including our very own PVC Strip Curtain range of products, accessories, and replacement parts which rely on the wholesale cost of PVC resin which has seen multiple price increases during 2020 and the beginning of 2021.
PVC is a globally used, versatile and a relatively cost-effective raw ingredient that is used in the manufacture of a broad range of products used around the home and used by industry. Everything from industrial welding screens to flip flops can be made from PVC. Starting in early 2020, many business sectors and manufacturers have seen price increases in PVC resin due to the pandemic and related business challenges. Reduced production levels combined with strong consumer demand for many PVC related products has altered the fine balance between manufacturing supply and consumer demand as many industries were forced to shut down during March 2020 and again at the beginning of 2021. The main price pressures have resulted from the overall rising costs of business operations such as energy, distribution, and the base PVC resin prices which is the core of many PVC based products.
Plastic News picked up on this price story and said that PVC prices rose for 5 consecutive months once the pandemic started to take effect and that prices were approximately 20% higher at the end of November 2020, compared to June 2020. The published article also stated that the rise in demand was pushed higher by the quarantine results on household projects, mentioning the fact that the construction industry in the United States of America and Canada typically accounts for about 60% of the PVC consumption.
Another leading industry source, Plastics Technology created an article in the last quarter of 2020, about the upward pressure on PVC resin prices seen during 2020. According to the author, PVC prices went up three times in just two months because of “a tight market, strong demand from the construction industry, higher export prices, limited availability, and the late-settling September ethylene contract price increase,” all of which sent global PVC production costs in the wrong direction.
As 2020 got underway, and businesses reacted to the growing uncertainty regarding the pandemic, there was limited availability of resin from multiple PVC makers around the world which according to S&P Global, was made worse by chlor-alkali production issues and hurricane damage at manufacturing facilities. We also saw a big change in consumer behaviour which filtered through to business operations, such as the steep rise in online shopping and the higher expectations placed on delivery times, resulting in higher transportation costs. Both on a global scale and at a local level, with container costs rising as much as 10-fold in some instances, these changes in behaviour are likely to remain and will continue to impact businesses, their operational costs, and the cost to operate as rates increase in the year ahead.
Here at PVC Strip, we are not immune to what happens on the global stage and to these rising costs. We have worked hard and continue to do so to minimise the impact of these price increases to our customers as much as we possibly can. This includes focussing on our price promise guarantee and extending this throughout 2021, absorbing as much of the external cost increases as we can to remain the best value supplier of industrial PVC Curtains and associated products.