Domestic price of plastic and rubber products

IBISWorld forecasts the domestic price of plastic and rubber products will increase by 1.3% in 2024-25, to reach 127.5 index points. The subdued growth in price follows preceding years of very strong price growth amid bottlenecks in global supply chains and a more general surge in inflation. In the current year, inflation is expected to trend downward, while global supply chains will continue to rebuild capacity after the shock caused by the global pandemic. As a result, growth in the price of plastic and rubber products is forecast to slow, albeit some growth is still expected.

The COVID-19 pandemic caused significant turmoil in global supply chains, which has flowed through to sharp increases in the price of plastic and rubber products in New Zealand over the past few years. A sharp decline in aggregate demand was followed by a sharp uptick in demand as restrictions have eased, which caused severe difficulty in global production capacity. Supply chain pressures also restrict inputs to plastic and rubber product manufacturers, placing upward pressure on producer prices. Additional problems arose from the Russia-Ukraine conflict, which severely increased global energy prices, further inflating the cost of production, while intermittent lockdowns in key manufacturing hubs, like China disrupted the global supply of plastic and rubber. On top of issues in global supply chains, a sharp fall in the trade-weighted index also reduced the purchasing power of downstream businesses and consumers in international markets. This has resulted in overseas plastic and rubber products becoming more expensive for domestic buyers in New Zealand, especially in 2021-22 and 2022-23, which saw steep increases in prices.

As crude oil is a key input in plastics and rubber manufacturing, varied global prices have presented challenges for domestic plastic product manufacturers. An overall increase in the world price of crude oil over the past five years has placed upward pressure on the domestic price of plastic products. The world price of rubber has also increased over the past five years, boosting input costs for rubber product manufacturers. Overall, IBISWorld forecasts the domestic price of plastic and rubber products to rise at a compound annual rate of 5.4% over the five years through 2023-24.