Plastic Makers Reel on Soaring Oil Costs, Rising Competition
- Pricier crude-based feedstock eroding petrochemical margins
- More plastic plants being brought online in China, South Korea
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Producers of plastics across Asia may be bringing on more plants to meet the ever-growing demand for everything from face masks to automobile spare parts, but their strategy isn’t translating to profits just yet.
That’s because the rising costs of crude and other raw materials -- namely oil-based naphtha and liquefied petroleum gas -- are coinciding with more petrochemical output and the inability of producers to pass on higher expenses to consumers. That’s resulting in lower margins, and is prompting smaller factories to consider run cuts.