No end in sight for IBC boom
By Staff -- Purchasing, 1/15/1998
The booming use of intermediate bulk containers (IBCs) is not waning. Customers continue to shift from smaller one-trip containers to larger, reusable IBCs. And this shift is now providing an added benefit: Increased supplier competition is keeping prices relatively low, and the number of design options is steadily increasing.Buyers looking for container re-use, environmental safety, and consolidation of total containers shipped often turn to IBCs. Either rigid or flexible, IBCs handle the transport or storage of both regulated and non-regulated products. Rigid IBCs normally hold 120-660 gallons of material, and can be constructed of polyethylene, carbon steel, stainless steel, aluminum, and even corrugated paper. Some IBCs are combinations of more than one material.
While some IBC-types are more popular, the industry has yet to really standardize. This allows buyers to easily access an IBC that can suit their own specific needs.
Demand for rigid IBCs will head up 10.6%/yr through 2001, according to a study by The Freedonia Group, a market research firm based in Cleveland, Ohio. Of the rigid segment, the largest gains will be made by blow-molded polyethylene IBCs.
Prices look good for buyers
Competition is fierce in IBCs, so producers are pressed to keep prices relatively low. Most standard products see tags rise and fall only with raw material costs. The most common types of IBCs are made from a polyethylene bottle (high-density polyethylene--HDPE) inside a steel cage or shell. Blow-molding grade high-density polyethylene contracts rose an average of 3(cent)/lb in the second quarter of 1997. But they soon fell back down again-- to 43(cent)/lb in the third quarter and 42(cent)/lb in the fourth according to Purchasing's monthly transaction price survey. Buyers expect tags to fall further into 1998--down to 38(cent)/lb in the second quarter of this year.
IBCs made entirely of HDPE are increasing in popularity as well. They're often made of a higher grade of high-impact engineering resin. Higher-performance grades are often up to a few (cent)/lb more expensive, but usually tend to follow the same pricing trends as standard HDPE grades.
IBCs made from stainless and carbon steel can handle more demanding applications. And metals prices seem to be heading in the opposite direction as plastic. Example: Purchasing's market sources forecast stainless steel type 316 to increase by about $64/ton in the first quarter of this year, and an additional $39/ton in the second. Stainless type 304 will jump by $50/ton in the first quarter, and an additional $31/ton in the second. Prices should hold near there for the rest of the year. Many metal IBCs offer specific design advantages, so they already go for larger amounts of dollars than the common plastic designs.
Suppliers must provide options
IBC suppliers are well aware that the industry has evolved, even over the past two years. Suppliers have pushed into small, but lucrative, niche markets with specific IBC designs and functions. But even more importantly for commodity-type IBC customers, suppliers are pursuing the container management and logistics areas with vigor. Most major IBC suppliers have either set-up, or are in the process of setting up, container management services. These services often consist of handling all the logistics of shipping and returning the IBCs, as well as reconditioning or recycling.
For buyers needing more information about IBCs, the conference "IBC USA '98'' will be held February 2-3 at Adam's Mark Hotel in Charlotte, N.C. The conference will cover both rigid and flexible IBCs, including sessions on IBC use, reconditioning, and logistics. For more information, contact Baltic Conventions at (318) 323-3680.
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