Following along the path of several other supply chains, the global plastics market has been struck by a shortage that’s been building up since March 2020. The shortage is hurting the supply of resins used to make everyday goods like medical gear and cell phones. While the supply of resin shrinks, the cost has gone way up–consumers are starting to see rising prices in these simple goods due to the higher price of resin.
Minnesota-based MedSource Labs is one of many medical groups struggling to get materials to make plastic gloves for PPE kits.
“Things that never happened are happening,” Todd Fagley, MedSource’s chief executive officer told Bloomberg. “It’s kind of like the Wild West out there for medical device procurement and manufacturing.”
The shortage isn’t just hitting major industries like auto and tech–it’s also hurting small manufacturers who need simple parts. Deb Dershum of The Better Bungee spoke to us about the trouble her company is facing trying to obtain the raw materials necessary to make their bungee cords.
“In our industry bungee cords and straps are becoming hard to find–there are even back orders on rubber and shock cord,” said Deb. “We were told we can’t order any more plastic resins and the price of our hook ends has increased over 25%. Only government contractors can get plastic and we’re seeing all sorts of back orders that contain polyesters or polyethers.”
The root of the problem can be traced back to a number of events–ranging from plant shutdowns and shipping container shortages due to Covid-19 and the winter storm in Texas that caused blackouts all over the state. The storm led to chemical plants shutting down throughout the Gulf Coast, with several still at a standstill. These plants are responsible for making the chemicals compounds that are used in plastics, auto parts, computers, and a number of other common products.
“We had no idea how much came from the Gulf Coast area,” said John Schiegg, a supply chain manager in Houston. “I tell people it’s going to get ugly. There’s going to be a big fight for materials.”
Following the event, the U.S. Chemical Safety and Hazard Investigation Board called on chemical companies to better prepare for extreme weather events in the future.
As plants slowly reopen, it will take months for inventory to pick back up and prices to deflate–analysts predict the market will return to normal around June.