While plastic makers are enjoying the windfall, toy manufacturers are warning that these surging material costs will eventually be passed down to consumers
US-based plastic manufacturers, including Dow and LyondellBasell, are seeing growth amid the Iran war and the subsequent closure of the Strait of Hormuz.
Middle Eastern producers supply 20% of global polyethylene, a plastic compound used in a range of consumer products, including detergent bottles, food packaging, and more. The region has slashed output amid the geopolitical conflict, and now North American firms are filling the vacuum.
Dow recently announced aggressive price hikes for polyethylene, jumping from a planned 10-cent increase in March to a staggering 30-cent hike for April.
The two companies’ stocks are rallying; the Dow has surged 77% this year, while LyondellBasell has risen 84%.
Not all are happy
While plastic makers are enjoying the windfall, toy manufacturers, like Basic Fun!, are warning that these surging material costs will eventually be passed down to consumers.
Packaging companies like Amcor and Magnera that buy plastic resin to make their products, have seen their shares decline in March.
Other US industries facing a boom due to the Iran war hitting major supply chains include Chemours and Tronox (both make the titanium dioxide pigment used in paint and wallpaper), and Celanese, which produces acetic acid.
Analysts suggest that even if peace is declared in the Middle East, it could take eight to nine months for global supply chains to normalize.