So, Does the price of plastic resins depend entirely on the oil price, or there are other reasons?
The answer to the rising plastic resin prices of the manufacturers or the distribution channel is often due to the decline in raw material supply and depletion of factories' inventories. However, this answer is also difficult to satisfy the end users, who buy our plastic packaging, and those who buy the finished product.
But if we look deeply into the plastic resin supply chain, we will see that there is indeed a close connection between them and crude oil.
Newly mined crude oil is a mixture of substances derived from hydrocarbons with different boiling points. A refinery uses those different boiling points to separate the components of crude oil into useful products, including gasoline, diesel, jet fuel, fuel oil, and naphtha.
Naphtha can be further processed through a process known as 'cracking' for the production of major plastic raw materials such as ethylene and propylene. They are then polymerized to produce polyethylene and polypropylene, the two most common forms of plastic material. There are the primary plastic resin that we often mention.
Thus, can be seen that oil has a clear impact on plastic prices because it is the source of petrochemicals, at least in the way they are produced in Europe, America or Arab countries.