Plastic transformers say they need to raise their prices by 25 per cent to cover the rapidly soaring cost of raw materials.
These mostly small businesses buy or collect discarded plastic and treat it so it can be used again.
"Plastic transformers are facing losses from higher production costs, particularly from the plastic-resin price climbing from $1US,400 [Bt46,800] per tonne in the last five months to $1,800 per tonne now," Veerasak Kositpaisal, chairman of the Plastic Industry Club of the Federation of Thai Industries, says.
Plastic resin is used to make finished products such as packaging textiles, stationery, reusable containers, laboratory equipment and automobile components.
The price of plastic resin surged sharply after the skyrocketing price of oil forced manufacturers to cut their plastic-resin production to manage costs.
The supply shortage was also partly caused by high demand in China and India.
The profit margin for transformed plastic products is normally 5-10 per cent, which could not cover the surging cost of production, he said.
Plastic transformers should invest in enhancing their manufacturing technology to make value-added products, reduce wasted resources and boost productivity, he said.
"In the past, plastic manufacturers might consider such investments unnecessary and wasteful."
"Despite the high cost, they are forced to do it in a bid to differentiate their products in the market and boost product margins to handle higher production costs," he says.
Sanan Angubolkul, president of Srithai Superware, says a few hundred small plastic transformers have already suspended operations because they can't handle the rising price of plastic resin.
The price of polypropylene shot up from Bt55 per kilogram at the beginning of this year to Bt81 presently," he says.
"If the polypropylene price surges rapidly to Bt90 per kilogram, more than 500 plastic transformers will shut down this month," he says.
The situation worsened when most plastic-resin makers forced their customers to pay in cash and reduced their future orders in a bid to moderate their financial risk.
As the country's largest plastic maker, Srithai Superware also suffers from the global shortage of raw materials.
"Earlier we were supplied raw materials domestically, but now we need to buy some plastic resin from abroad. However, we still cannot operate at full capacity due partly to the economic slowdown," he says.
Source: www.packagingdigest,.com.au
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