IBISWorld Study Analyzes Impact of Falling Oil Prices on Plastics Manufacturers

Research firm IBISWorld has analyzed what an $80 per barrel oil price would mean for the plastics industry across the entire supply chain. Here are the highlights of the study:

  • A drastic drop in oil prices makes the plastic industries (e.g., plastic and resin manufacturing, synthetic fiber manufacturing and laminated plastics manufacturing) significantly less risky to operate within.
  • Falling oil prices will make oil derivatives, such as propylene, ethylene, phenol, acetone, chlorine, benzene and naphtha less expensive for plastics manufacturers to purchase.
  • A drop in oil prices will trickle down to industries that incorporate plastic as a key component in their production. This includes everything from automobile manufacturing and residential construction to everyday products such as carpets and water bottles.
  • However, the recent slip in oil prices is unearthing some concerns about the health of the global economy. A slow economy generally facilitates decreased spending across the board, even on everyday products. Falling consumer demand for these products forces most manufacturers to scale back production, decreasing the need for input goods such as plastic. Therefore, the overall slip in demand for plastics products is likely to result in lower oil prices if these industries are using less oil as a production input.

 

Click here to see an oil scenario prepared by IBISWorld analysts.

 

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