PE price hikes will boost plastic drum tags
By Staff -- Purchasing, 9/2/1999
Recent polyethylene price increases, some announced in excess of 10¢/lb, obviously will have an impact on plastic drum prices. These price increases occur just as the Asian economy is looking a little better, and chemical exports to the Far East are starting to edge up.Demand for plastic drums was good in the first half of '99 due to an unlikely source--people preparing for Y2K problems were buying them to store water in their basements. "This did create an uptick in demand," says Tim Knaus, product general manager for Russell-Stanley. This slightly helped offset the decline in chemical exports in 1998. But this blip has faded in recent months, and the Asian economy is improving enough that demand for shipping containers bound for Asia is growing. "We had a good year in 1998 just on the basis of the strength of the U.S. economy, and we expect another good year in '99" says Jim Craig, product manager for plastic drums at Greif Bros.
Plastic drum buyers who relished the low price of drums (due to sluggish drum demand and sluggish polyethylene prices) should be aware that the party is ending. "Polyethylene prices are the biggest factor in the cost of a drum," says Craig. Polyethylene prices are going up--with 11¢ increases already announced, and further increases expected on the way. Even if all the increases don't stick, it has a serious impact on drum prices.
Growing areas of use
Plastic drums are most commonly used in the food and beverage industries, but are continuing to grow into newer applications such as plastic resins, other resins, and pigments. Producers expect applications with purity and sanitary concerns to help fuel plastic drum growth. On this front, Russell-Stanley has introduced the L2-EC, a co-extruded drum for the electronic chemicals market. The co-extruded nature of the product allows for a different material on the inside of the drum for purity reasons. The paints and coatings, food, and pharmaceutical industries often require drum purity as well. "We're always looking for ways to make them cleaner," says Knaus. "We now have the ability to manufacture drums in a clean room and rinse them in de-ionized water."
One area of strong growth has been in the open-head plastic drum. Open-head poly-drums are replacing fiber drums in applications including solids and highly viscous liquids. While this changeover could be dampened by higher drum costs (depending how high PE prices go), it remains an ongoing factor. Russell-Stanley has recently introduced the E-OH plastic drum, a European-style open-head container.
But the real action is in the rental of "fleet drums" that many manufacturers offer. "We're no longer just in the business of selling drums, we rent them as well," says Knaus. In fact, Russell-Stanley is renting as many E-OH drums as they are selling. The rental idea has long been used in the intermediate bulk container (IBC) market and is rapidly gaining popularity for plastic drums as well.
Another option for plastic drums is reconditioning. Plastic drums can be reconditioned after 5-10 trips. Reconditioners wash and recertify the drums. If unable to be recertified, the drum can be ground up for recycling.
There are a few drawbacks to plastic drums. They are incompatible with concentrated chemical solvents and don't meet safety criteria for storing many flammable materials. But even when under price pressure, they remain a strong alternative to shipping in steel or fiber.
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