Dow Inc. (NYSE:DOW) and Exxon Mobil Corp. (NYSE:XOM) are implementing price increases for plastics as the sector contends with supply interruptions stemming from the US-Israeli war on Iran.
According to a document reviewed by Bloomberg, Dow notified North American customers that it will raise prices for polyethylene resins through at least May. The company is set to add 30 cents per pound for April and has a further 20-cent-per-pound increase planned for May.
Exxon and Nova Chemicals Corp. announced last week that they will raise April polyethylene prices by 30 cents per pound. That increase was larger than the 20-cent-per-pound hikes those companies had earlier planned.
The surge in U.S. petrochemical prices has coincided with disruptions to shipping through the Strait of Hormuz, where marine traffic has been halted amid the conflict. Prior to the hostilities, about a fifth of the world’s oil and liquefied natural gas transited that route. Oil and LNG serve as primary inputs for plastics production, and interruptions to their flow have tightened feedstock availability and raised costs.
The cumulative effect of the announced increases has been substantial in market terms; one buyer cited to Bloomberg said polyethylene prices have more than doubled compared with levels before the war began.
Pressure on downstream suppliers has followed. INX International Ink Co., which produces inks and coatings used to print and package goods, has told customers it will raise prices for solvent ink products by 13% and for solvent coating products by 10% effective May 1. The company attributed the increases to higher material, energy and transportation costs tied to geopolitical disruptions, including the conflict in the Middle East.
These moves show how a disruption to a key international shipping corridor can quickly propagate through the petrochemical value chain, pushing up costs for resin producers and prompting related manufacturers to pass on higher input expenses to customers.