In a bid to deal with rising feedstock costs that are beginning to affect the bottom line, Thailand's plastic processing industry is considering a 25% hike in price of finished products. As resin prices have spiked by over 30% in about 4-5 months, the Thai plastic processing industry, mostly fragmented over smaller sized players, is facing losses from higher production costs. Coverters in Thailand usually work on a profit margin of about 5-10%, which is incapable of covering the surging costs of production. This could result in an increase in prices of processed products such as packaging textiles, stationery, reusable containers, laboratory equipment and automobile components.
The situation worsened when most plastic-resin makers forced their customers to pay in cash and reduced their future orders in a bid to moderate their financial risk. In fact, a few hundred smaller processors have already shuttered their manufacturing plants, suspending operations