Oil cost likely to drive up price of household plastics

Press, 16 July 1979, Page 1

Oil cost likely to drive up price of household plastics

Energy Reporter

Recent oil-price rises will reflect in the prices of a wide range of household plastic goods in the next four months, according to industry spokesmen.

Telephones, electric switches, furniture, plastic cups, jugs, toasters, hairdriers, bottles, toilet seats and detergents are among the domestic items that are made from petrochemical materials. Other widely-used products that will be dearer in the next few months include plastic packaging for foodstuffs, including export lines, plastic pipes, and building materials. P.D.L. Plastics, Ltd, which makes all New Zealand’s telephones and 80 per cent of all electric switches, has seen the price of one raw material rise 69 per cent, from 74c a kilogram to $1.25. Although the general manager (Mr L. Broekmeyer) could give no idea what price increases could be expected, he said such increases would be passed on to the consumer.

“The cost of raw material is about 90 per cent of our selling price, so any lift in that price will increase our price to our customers,” Mr Broekmeyer said. Both P.D.L. and the other big plastics manufacturer, A.H.I. Industries, Ltd, sell to other manufacturers, which in turn can be expected to pass any increased costs to their customers, the wholesale or retail merchants. At the end of the line, the householder, farmer or company faces a hefty price increase.

The reduced supply of oil on the world market could further aggravate the problem. Raw materials for the petro-chem-ical industry were scarce after oil production was disrupted in Iran, but this has now eased.

P.D.L. bought nylons,

polycarbons, polyethylenes and other materials from sources as diverse as Hong Kong, the United States, Australia, Britain and Japan, Mr Broekmeyer said. The general manager of A.H.l.’s group of plastics companies (Mr B. Wallace) said that New Zealand was at the end of a very long chain of supply. Distance made it difficult to put New Zealand’s problems in perspective in the world situation, he said. Plastics would still be competitive with alternative products, such as metal and glass, he said. The manufacture of plastics required little energy, whereas the metal and glass industries were

heavy users of energy for melting processes. The possibility of cheaper supplies of raw materials from indigenous sources appears to have receded. The Maui gas and condensate field has been suggested as the base for a New Zealand petrochemical industry, but the users of the field are geared towards liquid fuels. When the Government decides what liquid fuels will come front Maui, it will then decide what other uses, if any. will be made of the resources. A petro-chemical industry does not seem to be high on the list of priorities being considered by the Government.