It may be hard to believe, but a hurricane in the Gulf of Mexico could have a devestating impact on the price of plastics. Here is how Bloomberg writer, Kevin Crowley, puts it in his article, “Record Plastic Prices May Go ‘Stratospheric’ on Hurricane,” written before the storm hit:
Tropical Storm Ida is strengthening and by the time it slams into Louisiana on Sunday afternoon is expected to be packing winds of 115 miles per hour (185 kph). That puts chemical plants owned by Exxon Mobil Corp., Dow Inc. and others squarely in the bull’s-eye, threatening supplies of polymers used in everything from shampoo bottles to water pipes.
As it turns out, Mr. Crowley underestimated the storm, and the wind speed as Ida turned out to be a Category 5 Hurricane which clocked in with winds at 157 miles per hour. This is a double whammy for plastics as the big freeze in Texas has already caused prices to rise to historically unprecedented levels.
How bad could it be? Mr. Crowley, again writing before the storm hit, quoted an expert as stating:
“Long-term outages induced by tropical weather could fuel stratospheric price rises that downstream supply chains and consumers cannot easily afford,” Pafford said. “With the majority of U.S. commodity plastic resin capacity stationed on the Texas and Louisiana coasts, one devastating hit could bring months’ worth of polyethylene, polypropylene and/or polystyrene shortages.”
As of this writing, the storm has downgraded to a Tropical Storm. As a result, it is too early to know the full impact of the damage. However, it is fair to say that yet another act of nature will mean higher prices for toy manufacturers, retailers, and consumers.