Supply chain crisis hits Australian packaging as freight soars 250%, resin prices spike 50%

AUSTRALIA – Australia’s plastic packaging manufacturers have been slammed by a new supply chain crisis, with resin prices jumping up to 50 percent in a single week and freight costs surging 250 percent as Middle East conflict disrupts oil and petrochemical supplies.

Industry leaders are drawing stark parallels to the pandemic’s darkest days.

Aleks Lajovic, managing director of Sydney-based tube manufacturer Impact International, described the chaos as “Covid 2.0,” a return to the days when prices vanished and lead times evaporated.

His company, which supplies tubes for food and cosmetics, relies on imported polyethylene resin from the Middle East.

Those supply lines are now buckling.

By the Numbers: A Perfect Storm

The data tells a sobering story.

According to Lajovic, polyethylene prices have exploded by 30 to 50 percent within the past week, while freight costs on some routes have tripled.

Impact has already notified customers of a 15 percent price rise on future orders—increases that will soon ripple onto supermarket shelves.

Vinidex and Polypipe have warned clients that April delivery prices are up to 50 percent higher than March, with existing quotes cancelled.

Raphael Geminder, chairman of major rigid plastics manufacturer Pact Group, warned the industry should brace for deeper disruption as suppliers invoke force majeure clauses.

Domestic Supply Tightens

Adding to the squeeze, Viva Energy, now Australia’s sole polypropylene producer according to industry reports, has advised customers it will increase prices and ration supply from its Geelong refinery.

Polypropylene is critical across packaging and healthcare.

The timing stings: Australia’s last polyethylene manufacturer, Qenos, closed in 2024. Industry data published in Science Direct shows around 77 percent of virgin polymers used locally are now imported.

A Silver Lining for Recycled Content?

Amid the gloom, recyclers see a glimmer of opportunity.

As virgin PET prices spike, the traditional price gap between virgin and recycled material narrows.

David Finlayson from Martogg noted that recycled PET pricing is currently more influenced by collection volumes than oil prices.

According to independent analysis cited by the Australian Packaging Covenant Organisation, packaging reforms could attract A$220 million in private investment and support 19,000 jobs by 2030. For now, however, manufacturers are scrambling.

Navigating the Chaos

Caps & Closures managing director Brendon Holmes told customers the company is prioritizing forward planning and supply visibility.

Customers are being encouraged to share forecasts early as both sides attempt to manage risk collaboratively.

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