Page 38 - The Inside Scoop Archive

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The Value of the Dollar: With the value of the dollar depreciated on the world market, other countries who
have accumulated our dollars can use them to buy our resin, or anything else we have, at prices that are
lower than they would have to pay for similar products in their own country.

Weather: As we learned during the aftermath of Katrina, weather, and especially hurricanes can have a
major impact on the availability and price of resin in the US.

ROI: Just plain old return on investment. The resin companies need a good return on their investment in
order to expand processing facilites, and fund research and development for improved resin performance
etc.

One Additional note, while it is true that raw materials constitute about 70% of the cost of stretch film, it
is also true that there are other costs, non-related to raw materials, that must be passed through to the
final price from time to time. These costs are factored in to price increases whenever there are resin cost
movements. Because of this, a resin increase of .05 lb may go to the end user as a .06 lb increase for
example.

I trust you are getting the picture that supply and demand is a great deal more involved that just the
interaction between the resin producer and the extruding companies. Soft demand in the US such as we
are now experiencing, is not enough to prevent price increases when there is significant demand for the
same resin from outside markets who are competing for the same pound of resin that your friendly local
stretch film manufacturer wants to use for making your stretch film.

Granted the insights that I have provided into understanding price movements for resin and stetch film are
somewhat simplistic, but people in our industry who are far brighter than myself, also have a great deal of
difficulty with this subject. The bottom line is that resin price increases may be being pushed by
factors ,or a combination of factors, that are not readily evident to us from our particular vantage point.
The law of Supply and Demand does work and is at work in all stretch film price changes.

Coming Next... Lean Stretch Film

Footnote: If you are interested in keeping a tab on the price of resin, I would suggest that you
might want to go to www.theplasticexchange.com website and view their market update
sections on resin.

file://C:\Documents and Settings\William Jackson\My Documents\Northwoods Software\... 5/14/2007