How an Oil Crisis Impacts Plastic Manufacturing & Prices

Whether we’re talking about the ongoing Strait of Hormuz crisis or past and future events that disrupt the plastics pipeline, it’s important to understand how an oil crisis impacts plastic manufacturing. This isn’t just about rising costs you might see in feedstock plastics for your parts, but also about supply chain disruptions that can affect your end product if you don’t plan with your manufacturers before the crude stops flowing.

Plastics in the Global Supply Chain

Most plastic used in manufacturing is a petrochemical derivative, often known in this raw or “virgin” state as a resin. This means that when crude oil prices rise and the amount shrinks, both the cost of the resin and its availability are directly affected. For example, Polyethylene Terephthalate (PET) is a common plastic used in injection molding, especially in liquid containers. According to a recent Reuters article in March of this year, we saw a year-over-year increase of 15.4% in Europe and 29% in the US, showing the very real impact of squeezes on the global oil chain on plastic prices and availability.

Planning Ahead with Your Plastic Injection Manufacturer

The last thing you want is a disruption in the flow of crude oil to affect your end product through complete stoppages. As we saw during the times of Covid, transportation disruptions were a major headache for all parts of the supply chain. You must work with your injection molding manufacturer to limit this, such as investing in a push-pull supply system for your orders.

What is the Push-Pull System?

At Midstate Mold, our push-pull system is based on our client’s expected sales. We produce the correct number of plastic parts in advance to ensure that by the time the client is ready to place the next order, the product is ready to ship. It’s a method perfectly suited to protect our clients and us against costly hang-ups and delayed delivery. Learn more about it here.

Shortening Your Plastic Parts Supply Chain

With supply disruptions and the current administration’s tariffs both in effect, it’s a good time to assess your current supply chain and take measures to reduce costs and increase reliability. These include:

• Tool Relocation: Whether due to trade wars or oil shipments, overseas manufacturing isn’t what it once was. Getting your tool relocated to start injection molding closer to home is easier than you think.

• Investing in US Manufacturing: While you may need to increase costs domestically, you can leverage these investments as strengths for your products. By avoiding the drawbacks of overseas manufacturing, you can enhance your products’ quality and offset the costs.
• Protecting Product Quality: Now more than ever, your products will need to be made of high-quality, US-sourced plastics. This, combined with the strengths of US manufacturing and IP protection, will give you products that can better weather uncertain economic times.

At Midstate Mold, we understand everything about plastic manufacturing, from design and the creation of injection molds to the production of plastic parts and the sourcing of high-quality polymers for your parts. We can give existing tools a new lease on life through mold tool reshoring and improved mold maintenance in the US, as well as helping redesign your parts to be more efficient and reduce costs with Industry 4.0 technology. Contact us today to get started.