I. Introduction
A. Background
Plastic has been used for so long for the past generations. It has been something that is commonly helping us in our daily life. Many people know that plastic is very durable and can contain a lot of things. “plastic can be stiff and hard or flexible and soft because of their light- weight, low-cost, and desirable properties, their use has rapidly increased” (Stein, 2004). The plastic that we know such as hosepipes or washing-up bowls begins life as a raw material, or resin, produced by polymerization. Initially, the resin starts off as a powder, or as pellets or flakes, to which various other materials are added. Some of these provide color or texture, while others give the plastic particular physical properties, such as fire-resistance, slight electrical conductivity (to reduce static buildup), or added strength. Additives called plasticizers make a plastic flow more easily while stabilizers called antioxidants help to prevent it from breaking down over time, for example, through the effect of the ultraviolet radiation in sunlight. Once the raw material has been prepared, the final product is produced through a range of different manufacturing processes. Extrusion involves squeezing plastic like tooththrough a mold and is used to make goods such as hosepipes and polyethylene sheets. Injection molding involves heating resin pellets until they melt, then forcing them under pressure into a mold, where they cool and harden to make objects such as plastic telephones or toy cars. A 5 a similar technique called blow molding makes plastic bottles by forcing a thin layer of plastic against the mold with compressed air. Casting is used to shape thermosetting plastics by pouring them into a mold then heating them until they set. And calendering involves squeezing sheets of plastic between huge rollers to make thin, flexible materials such as plastic folders. As we all know plastic has the ability to be shaped into different forms and because of this it has an edge to many competitions. Furthermore “Densely packed polymers can create a rigid plastic, whereas loosely spaced ones can lead to a softer more pliable plastic” (Thompson, 2009. pp 1973-1976.) due to these there are various types of plastics and therefore have a lot to choose from. Moreover “Foods stay fresh longer when packed in plastic, which reduces waste by reducing the amount of spoiled food that must be discarded and decreases the amount of preservatives needed to keep food fresh.” (Plastics, 2014.) plastic really helps all of the people in the world. Not to mention plastic these days are developing into something more friendly to the environment so that the people can once again start to value it as something in need.
B. Benefits & Beneficiaries
The ones who benefit in this research are the business owner, product supplier, and the other plastic company owners. The plastic company owner will attain information about the time 6 the plastic prices will rise and fall. The product suppliers of each company will be cognizant of the times that they need to supply the most amount of raw materials. The other plastic companies will acquire insights pertaining to the trend of the change of prices in the plastic. Both the business owner and the other owners of the plastic company will familiarize on the factors that will affect the price.
C. Objectives
The researches wishes to identify the factors, peak and off-peak, and avoiding the loss of sales that would affect the sales of plastic. Figuring out the factors that will affect the price would help in maintaining a stable price. Although there is a stable price, peak and off-peak will still be present all throughout. Additionally knowing how to avoid the loss of sales would help drastically in the companies. To be able to investigate on these ideas, the paper would like to answer these following questions:
1. What are the factors that affect the change of plastic bags price?
2. when will the peak and off-peak on the sales of plastic strike?
3. How can the plastic management avoid the loss of sales during off-peak season?
II. Body
A. The Factors that Affect the change of plastic bags price
There are many different factors that affect the price changes in the world. Some factors would help increase the value and other would also decrease the value. Few of the raw material plants around the world produce tons of their product each day but “several raw material plant turnarounds came to an end, which helped to ease the supply shortage” (Platt, 2016, para 6). Due to many improvements in various raw material plants the production of their products once again began and therefore prices on plastic slowly declined. Moreover, Chua (personal communication, September 8, 2016) stated that one factor that could affect the price of plastic would be the availability of the raw materials. Therefor, the fall on the oil prices influenced the fall on the price of plastic and the dollar exchange rate would greatly affect the price of plastic if it bounced up and down. There is a relationship on the availability of raw materials due to the demand of it, the price would instantly increase and decrease Moreover, many different kinds of factors could affect the price of plastic, one factor that would affect the price is “the fall in oil has dragged down the price of virgin plastic” (Kantchev & Ng, 2015, para 2). Due to the decline on the price of oil it also affected the price of plastic. The decline on the price of oil would mean that the value of the product will also decline because oil is very limited and that one small price change would affect the price on other products. According 8 to Chua (personal communication, September 8, 2016) another factor “would be the world market, the price of gasoline, and the dollar exchange rates.” there are many factors but crude oil is one of the few crucial factor for if the price suddenly crashed it would instantaneously altered the price of plastic. One small change could create a great drop or climb up in the prices of plastic. In addition, another factor would be that the changes in price is both the raw materials and resins are affected by the inventories, capacity utilization, imports, compound, and recycled materials (Derosa, 2011). According to Derosa, what she stated is all on how the availability of the raw materials would be and that it would depend on the owners. “Factors involved are dollar exchange rate, availability of raw materials” (M.Chua, personal communication, September 8, 2016. The source and the interviewee, Derosa and M.Chua have stated one common topic, the availability of the raw materials. This would also mean the owners are one main factor on the availability of it, due to the inventories of the raw materials, space of the compound, and also the space that is being occupied by the recycled materials.
B. The Peak and Off-peak on the sales of plastic
In selling any kind of items, there are different times for peak and off-peak seasons to strike a certain item. Then the peak and off-peak of plastic on the sales of plastic this year is different compared to the other years. “This year the peak season is expected to be a little stronger than in 9 recent memory, but consumer shifts are happening in a variety of different sectors. Changes have not only hit our products but they’ve also hit our packaging, especially in plastics” (Odette, 2014, para 2) due to the recent shift it became a little stronger. Furthermore, “on the supply side, the Braskem Idesa joint venture expects to be shipping new PE from a plant in Mexico by the end of April” (Esposito, 2016, para 2). Prices started to rise and are now affecting the market. Moreover, Chua (personal communication, September 8, 2016) settled that “sales would depend on the demand on the certain size because it would be used for certain products.” Due to the consumer shift the sales would now depend on the demand of sizes and due to the incline of PE prices it automatically wiped out the price drop and for sure will affect the demand on the sizes due to the change of price. Furthermore, the prices continue to change in each coming day and will continue to do so. “With polyolefin supplies exceeding demand, polypropylene prices dropped farther in June, while PE prices were mostly flat but facing strong potential for declines in the July/August time frame” (Sherman, 2016, para 1). In addition, “import volumes are generally lower than last year across most polymer classes partially due to the depreciation of the euro against the US dollar” (platt, 2015, para 5). With the polyolefin supply exceeding the demand needed and the depreciation of euro against the US dollar, it automatically affected when will the peak and off-peak of plastic but 10 since there was an exceed in the demand of the supply most have already bought it and thus giving that product an off-peak due to many products having been distributed to many companies and the depreciation of the euro affected the price of each product due to many of the distributors being stationed at Europe. Furthermore, Chua (personal communication, September 8, 2016) stated that the off-peak will depend on the size due to the demand of it in certain times. Just as to the source the demand of the polyolefin supplies increased and due to that many were crafted and thus had a overflow of the size and that the size still has not reached the peak period thus, it was automatically an off-peak to the size. There are many opportunities for the peak and off-peak “Regional prices for PVC are up an average of 3 cents per pound since March 1, as improving demand was amplified by tightness in supply. The increase marks a change in direction for PVC pricing, which had been flat in February after falling for three straight months from November-January” (Esposito, 2015, para 2). Furthermore, “the January PE price drop ended a three-month stretch in which prices for the material were flat. With oil under $30, more PE price drops might be seen in February” (Esposito, 2016, para 2). Due to this price drop happens a lot of times all-around the year. “Off-peak of the sales would depend on the demand on the certain size because it would be used for certain 11 products” (M. Chua. Personal communication, September 8,2016). Both the source and the interviewee stated something in common, that is that the off-peak would depend on the demand.
C. The Ways to Avoid Loss of Sales During Off-Peak Period
In order to compensate or avoid possible losses during an off peak season, “We usually stock up on sizes that are saleable. Like the standard sizes and still continue to produce those products that are really in demand” (M. Chua, personal communication, September 8, 2016). Furthermore, “converters of polypropylene follow the wait and see method wherein they only buy sufficient supplies to meet the pressing and immediate demands of the market” (Platt, D. 2016, para 14). In addition, the losses can be attributed to the unpredictability of the market particularly in the oil industry. “In January, the massive fall in crude oil and naphtha prices led to substantial reductions in petrochemical feedstock costs. The monthly contract price settlements for ethylene, propylene and styrene fell, respectively. Polymer producers were faced with no option but to grant major price concessions to their customers.” (Platt, D. 2015, para 1). There are similarities in both what the sources and interviewee stated, due to stocking in plastic the company has enough supplies to sell even when the prices fall down. Furthermore, to cut cost and losses during the off peak season coupled with the increase in prices of Polymer plastic one way to reduce lost and further cost is to locate and source and import 12 other raw materials from sources that offer alternatives, alternative raw materials that can be cheaper and more interesting to be manufactured. (Esposito, 2016, para 5). In addition, as the supply chain for raw materials decline especially in some parts of Europe and in USA, and so as to limit cost and loses, manufactures can directly buy from petrochemical factories lowering the additional cost that may be incurred due to additional middle-man expenses. (Powley, 2015, para 2). Due to the low prices of the raw materials the company will be able to avoid the loss of sales. Another way to cut losses especially during off-peak season is to stock-up on plastic products whose sizes are still saleable and to continue producing plastic that are still in demand (M. Chua, personal communication, September 8, 2016). Esposito, Powley, and M. Chua. are in agreement in finding solutions to lower costs and losses by searching alternative resources of polymer raw materials and limiting consumption based on the current demands. Still to counteract the losses that can be incurred during the off peak season, multiple ways such as offering samples of products with purchase can increase sales. (Hodge, 2013, para 3). Furthermore, the rewards programs like “buy 5 get 1” can really boost sales because it requires customers to buy more of the products than they might normally for the opportunity to get a free one. (Hodge, 2013, para 6). Another idea that companies could make use of to avoid the loss of sales is to plan ahead for the upcoming peak season so that the company can sell all the stocked 13 products and couple it with additional promos (M. Chua, personal communication, September 8, 2016). Both sources and the interviewee have the same view to make use of only the available products that can be sold.
III. Conclusion
A. Summary & Highlights
There are a lot of circumstances that may adjust the price of plastic. There are three important discoveries that the research acquired. The first would be that the factors that affect the change of plastics price is not only limited to the sizes, prices of oil, and the market but also to the area of space you have and anything that will limit the resources owned. The would be that the major factor that would affect the peak and off-peak plastic would all depend on the raw materials, due to its limited availability it would immediately affect the peak and off-peak. Lastly, the best effort to avoid the loss of sales would be having promos, it would boost the sales during off-peak season. Nonetheless, all these conclusions will aid in knowing when the peak and off-peak will be. 14
B. Limitations & Recommendations
This research, though comprehensive in nature still has limitations and to further improve future researches the following recommendations must be followed. The amount of time conducted for this research is very limited with only 13 weeks. In the given amount of time, we were only able to gather 3 interviewees and the information gathered were not sufficient. In order to elevate the information that were gathered, a minimum of 10 interviewees and at least 5-8 months to conduct this research. With all of this information, it may greatly affect the plastic production owner’s and their knowledge on the peak and off-peak season.
References
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