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Plastic Price Information July 2007

Market Price Information News Implications for VCI Poly Products

The plastic market has undergone three price increases so far this year since Jan 1, 2007. Basically LDPE, LLDPE and other raw materials have increased in price causing an increase in costs for products such as VCI film, VCI bags, foodgrade bags and specialty plastic products. This additional cost or at least most of it is almost always passed on to the end users. Will this be another year of record price increases for oil related products such as stretch wrap and plastic packaging? With the price of oil at $74/barrel today and projections by some analysts of $100/barrel oil within a year or two some believe that it will be.

Here are a few comments and articles we have come across during the past few weeks:

U.S. Stretch Film Producer
We have been notified by our resin suppliers that they have implemented their announced price increase. This is the third increase to take place in 2007 with a fourth resin increase still tabled for August 1, 2007. If this fourth resin increase is implemented, you should expect additional price increases on all products. The resin manufacturers are indicating that the reasons for these continuing price increases are the ongoing substantial worldwide demand for resins, plus cost pressures from feedstocks, transportation and energy. Based on the July 1, 2007 resin price increase, we will increase prices 7% on all orders received on or after July 30, 2007.

News Wires July 2007
Our resin suppliers have implemented the June 1, 2007 increase therefore the increase will be as follows: 7% effective on orders placed on or after August 1, 2007 and shipments on or after August 10, 2007. Orders placed prior to the increase date will be limited to your normal monthly purchases and must be placed for immediate shipment. We reserve the right to accept or decline orders for any reason. Additionally, a fourth increase has been announced by our resin suppliers to be effective August 1, 2007.

Dow Chemical plans to boost polyolefin film products by 5 cents/lb in August. "Costs of raw materials, such as polyethylene resin, continue to place pressure on polyolefin film prices. Strong global demand for polyethylene impacts the price and availability of the resin, which in turn affects film production." (A slight increase was a reported by buyers for film-grade PE products in June.)

Please take a look at your inventory levels and make sure you are covered as we work our way through the next couple of weeks. It is too early to tell if we will have another big buy-in and see lead times push out like we did in May, but I believe it's only prudent to review your stock position and plan for at least some delays.

Producer prices up on energy rise. A big jump in energy costs sharply pushed up prices that U.S. manufacturers and wholesalers paid for goods last month. Energy prices rose 4.1 percent, the biggest gain in six months.

We have been notified by our raw material producers that they will implement a July price increase. The stated reason for this increase is significant worldwide demand, particularly from Asia and Europe. Due to these circumstances, we will be implementing a 7% increase on conventional grades and a 8% increase on our premium grades. This price change will be effective with all orders placed on or after July 23, 2007 and/or any shipments made on or after August 1, 2007. Based on resin availability, we will be strictly limiting our customer's orders to a quantity equal to one month of their avenge historical six months orders. In addition, we reserve the right to accept or decline orders for any reason.

So there you have it! Of course there are some infrequent times when resin prices do not go through or even slightly reduced, however with the rising costs of oil I would say that some price increases will go into effect during 2007.

For our current pricing of VCI packaging visit the online catalog at www.corrosionvci.com/corrosion/


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