Rising oil price makes plastic items costlier
Plastic manufacturers are set to raise their prices by two to three per cent this month, on top of earlier rises, to offset cost increases.
A derivative of crude oil, polymer prices move in line with the movement in the prices of Brent crude, fluctuation in the rupee against the dollar and cost of labour. All three factors have worked to make crude oil refineries raise their polymer prices intermittently over the past two months.
Data compiled by plastemart.com shows prices of all varieties of polymer have moved up since August. Polypropylene (PP) has become costlier by 4.6 per cent and linear low density polyethylene (LLDPE) by 5.4 per cent.
“We have no option but to raise prices of plastic products in proportion to the increase in polymer prices. While we often pass on the raw material price increase to consumers, we also factor in labour cost, which has gone up consistently. Thus, plastic products are set to become costlier in the coming days,” said Pradip Thakkar, vicechairman at Mechemco Industries here, a maker and exporter of plastic products.
Brent crude has become costlier and the rupee has also fallen by 7.7 per cent since August. As a sequel, Reliance Industries has raised PP prices by ~2,000 a tonne this month; so has Indian Oil Corporation. Also, both have raised their LLDPE (basic) prices by ~2 a kg.
“Apart from crude oil price increase and rupee depreciation, cost of labour has also gone up significantly over the past few years. Engagement of skilled and unskilled labour has become costlier in the last couple of years. Another labour cost increase is on the cards in the next three months. Hence, we would raise our products’ prices by at least two-three per cent,” said an official with a leading plastic manufacturer.
This apart, India’s plastic export jumped by 17 per cent in 2017-18 over the previous year, to $8.85 billion. America was the largest importer from India, taking 12 per cent of our total shipment, followed by China (nine per cent) and the UAE (five per cent).