From being used as a packaging substitute to emerging as a full-end packaging solution, the plastic resins market has evolved significantly over the past three decades. What has contributed to the steady growth of this market at the global level is the wide-spread growth of the automotive, packaging, construction and FMCG (fast-moving consumer goods) industries. According to procurement analysts at Technavio, the packaging sector followed by the construction industry are the primary end-users of plastic resins products.
Tracing the evolution of the plastic resins market
From a research point of view, it is interesting to note that even a slight change in the cost of crude oil or natural gas has a direct effect on the prices of plastic resins. In the 1990s, when the plastic resins market was still in its infancy and the US was yet to witness the shale gas revolution, the prices of natural gases were very high. This not only drove up the cost price of these products, but also made the United States one of the most expensive producers of plastic resins across the globe. However, the 90s was also a time when there was increased demand for quality resins from different end-users, calling for investments in research and development (R&D) activities. In particular, large investments were made to enhance the quality of polyethylene and polypropylene products.
Cost Structure of the Plastic Resins Industry 2015
Source: Technavio
As the plastic resins industry expanded, the demand for a skilled labor force also increased. In fact, from 2000 onwards the global plastic resins market saw a considerable increase in labor prices. The main reason behind this development was a lack of skilled workers and the adoption of high-tech methods of resin production. Another development that occurred around this time was the growing need for sustainable methods of production as well as increased focus on employee welfare. Reduction of carbon emissions as well as better management of waste garnered a great deal of attention. As the plastic resins market evolved into an organized industry sector, heavy investments in employee welfare programs were also undertaken.
Since 2010, the major change that the plastic resins industry has witnessed is the hike in licensing costs. The cost of licensing has increased mainly due to stringent legislation across markets. This in turn has resulted in an increase in resin prices. Additionally, in order to overcome the effects of price fluctuations on the production of plastic resins, a great deal of innovation in the sphere of bioplastic production has taken place. Unlike conventional plastics, which are made from plastics, bioplastics are made from organic biomass substances. Though not completely ‘green’, bioplastics produce relatively less carbon-dioxide and are not affected by price fluctuations in the global crude oil market.
Thus, the global plastic resins market has come a long way over the past three decades. As mature markets like North America and Europe are looking for more innovative ways of manufacturing plastic resins, it is predicted that this market is will see a lot more expansion, as well as an immense amount of competition.
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