Spend Matters welcomes this guest article by Rajiv Joarder from Mintec.
The tradition of Halloween is based on an ancient Celtic holiday known as Samhain. To ward off evil spirits on this day, they used to carve jack-o-lanterns out of turnips, beets or potatoes and place them on porches and in windows with lumps of coal inside to add light. Irish immigrants brought Halloween to America during the 1800s and discovered that pumpkin, a native crop of North America, was ideal for jack-o-lanterns. Pumpkins have become so symbolic of Halloween that children are no longer satisfied just carving them and having it as a decoration piece at home.
According to the National Retail Federation, Americans spend around $6.9 billion on Halloween decorations and costumes. The average person will spend around $74.34 just for this holiday alone. The good news for parents is that Halloween just might have gotten cheaper this year with plastic decorations, mostly made from polypropylene (PP), being manufactured and imported from China.
Recently, PP demand in China was somewhat muted after the Chinese New Year, indicative of the country’s slowing economy. The recent stock market crash exacerbated the situation. Cheap local stocks became available in Asia and import demand fell as well.
The primary feedstock for polypropylene is liquefied petroleum gas (LPG) which is derived from crude oil. In the US, crude oil and natural gas is extracted through fracking, which is more cost-efficient than traditional drilling. As a result, the price of US LPG is a lot lower than LPG from the Middle East or Asia. So now the US is able to produce cheaper plastic feedstock, giving it a production edge it had not enjoyed before.
Also, the recent lifting of a trade embargo on Iran caused global feedstock costs to decrease because of an increased supply of propylene and ethylene. Additionally, US polypropylene inventories increased by nearly 1% month-over-month in August to 1.4 billion pounds, while production capacity remained the same, signifying polypropylene prices could fall further.
With some of the world’s leading economies slowing down, demand for plastic is at an all-time low, forcing the price downwards. But it is good news for consumers, since they can buy the odd luxuries at a cheaper rate.