Overview
Digitalization and sustainability are reshaping the pulp, paper, and packaging industries. While digitalization has reduced demand for traditional paper products like newsprint and office paper, it offers opportunities to enhance operations, support e-commerce, and develop smart packaging. Sustainability efforts in packaging are also a major focus, with companies in various sectors seeking renewable and recyclable materials, circularity, and emissions reductions.
At the same time, the industry faces consolidation, increased capital investment, and trade barriers. We help companies across the paper and packaging spectrum navigate these challenges, optimize operations through digitalization, and build future-proof strategies. Our expertise spans all sub-sectors, from specialty paper to packaging, ensuring that businesses can thrive in both developing and mature markets.
Key Insights for Companies from the Recent Surge in Plastic Resin Prices
A series of global disruptions has significantly reduced the supply of plastic resins, essential for producing everyday items like soda bottles, athletic clothing, PPE, and car parts. These disruptions were caused by severe weather in the US, unplanned production outages, and a global shipping container shortage, creating a perfect storm of supply issues. At the same time, surging demand and rising oil prices pushed resin prices to unprecedented levels starting in early 2020.
Here’s a chart showing the price increases of the two most common resin types—polypropylene and polyethylene. You can see how much prices have risen in each region, with the US experiencing the highest increases. If you need any further modifications or details, just let me know!
In the US, prices for polypropylene and polyethylene skyrocketed 180% and 125%, respectively. In Europe, prices rose by 67% and 77%, and in Asia by 25% and 30%. While prices peaked in August 2021 and have since started to decline, the situation has left long-term lessons for companies dependent on various inputs, not just resins. In a world of heightened trade uncertainties and logistics challenges, leading companies are now focused on improving supply chain visibility, resilience, and risk monitoring.
Companies can strengthen their resilience by qualifying alternative resin suppliers, identifying cost-effective substitute materials, and adopting standardized resin grades that allow easier switching between suppliers. As resin production capacity comes back online in 2022, and demand for PPE and food packaging decreases, the imbalance between supply and demand is expected to ease. However, prices are unlikely to return to pre-pandemic levels within the next year.
Forward-thinking companies are already preparing for the next disruption by leveraging their procurement functions to reduce costs and enhance resilience. Many are launching company-wide cost transformations, with a focus on design-to-cost strategies, simplification, and procurement standardization. Procurement teams are working closely with R&D, sales, marketing, and operations to improve supply chain transparency and collaboration.
Best-practice procurement teams are developing deeper insights into supply categories by setting up task forces with suppliers, mapping supply chains, and implementing automatic triggers to raise safety stocks when needed. The recent resin price spikes have highlighted the importance of supply chain resilience and transparency, and companies that closely monitor supply and price risks will be better equipped to handle future disruptions.
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Sanjay Dudani
Founder & CEOSanjay Dudani is Elaron’s Co-founder and CEO. An IIM Lucknow & NIT Calicut alum & backed by a...
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