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Market Update February – March 2020 News & Updates

Alliance Plastics

Resin Market

It happened again. CDI reported flat, and the resin guys came out and said, “Oh no, you didn’t!” CDI had to respond in early February with a letter stating that they made a mistake but with the inevitable cop-out, saying that their price always has an “e” meaning estimate giving them clearance for screwing up again. Since the resin manufacturers forced us to scarf down a 4 cent increase, they are holding flat and taking a siesta to ponder how to hang on to this increase as they stare down many world events that can cause some slowdown, waiting for their masterful move to push prices higher. The spreading panic over the coronavirus and market volatility will push towards softening, in my humble opinion, but let’s see what fresh excuse they have for an increase. Yes, as CDI has an “e” that means estimate, the resin producers have an “e” as well, which means an excuse for being able to flex their muscles. I wonder since most of these guys are down in Houston if they worked for the Astros?

Since March rolled around, we’ve seen more paralysis from a world slowing down to trying to figure out how to stop the spread of a pandemic. Russia and Saudi Arabia decided to start an oil war, which will glut the world supply with oil. However, we are watching as the resin suppliers are holding back supply to make sure they are pushing for another increase. Still, in this world, for that to happen, is about the same chance as the Patriots winning another Super Bowl with Tom Brady. CDI will be out next week, and it will drop with the oil prices going to record lows. I don’t know how much it will drop, but it will drop and continue to fall. The world is probably in a recession. We just don’t have the numbers yet. We could never have imagined that we would fight a virus at this level and that it would affect the world to the point of us having to change our traditional ways of greeting.

Paper Market

Paper prices are starting to move downward only due to the need to move inventory from the paper mills. Contract pricing is still not budging, but as more and more prime grade is being sold on the secondary market, the mills have to realize that people like me are going to have to bring our concerns forward and maybe force our contract prices to reflect the very active spot buy market. I know that there is a lot of junk out there, but some of the prime is the same material we are paying top dollar for. I hate to say that we are being taken advantage of, but we are fighting for high quality and lower pricing every day. Sooner or later, if the mills are not protecting us as a customer, we may have to look at other suppliers and see what our considerable buying power can procure for us. My father would tell vendors that our loyalty is strong, but consider our business as a train going down the tracks, if you are on the track after all our whistling and continue to watch us slowly come towards you, it’s your own fault if you get hit.

Our view:

Ten years ago, people would speak about me and laugh that I was a mild or full-blown germaphobe. I don’t take any comfort in telling everyone I was right, but I watch as everyone reacts exactly to what was bizarre 10-15 years ago. For my birthday, my team bought me a t-shirt that said, “NOT A HUGGER.” I wore it with pride. Yes, I knew that mine was a little different from what people deemed normal behavior, but I joked, “I won’t ever get sick from you people.” We all found humor in my quirky ways, but I wish I weren’t right. I wish for all of our sakes that I was wrong.

Fast forward to March 2020, and we are in a world that has taken my Louisville Cardinals away from an almost certain National Championship as they shut down both the ACC tournament and the NCAA Championship. I never thought I would be so hard up for sports. I watched the 1987 NBA championship game between the Celtics and Lakers and I told my friend next to me, “Don’t tell me who won!”

Prior to the unprecedented measures of our Governor calling a state of emergency and closing down the restaurants and bars, I was at Buffalo Wild Wings with a friend of mine, and I noticed we were the only ones in the bar. The staff was hanging around and had nothing to do. I felt worried for them, as they are making server wages at $2.13 an hour and hoping for tips. It was the first time where I looked at my friend and said, “This is going to be bad!” The bill came, and it was $38.00. I tipped our server $50.00 only because she told me we were her 2nd table all day. COVID-19 is here and we will see the numbers of those infected go up. I am not Nostradamus, just a realist. The pandemic will hurt all of us. We are all worried about the long term effects on the economy and the fact that we can’t find milk or toilet paper for the short term. However, I hope that we don’t lose more of our fellow citizens to this disease. I hope we find a world in recovery soon.

My wish is that all of you stay safe and stay healthy. For our employees who continue to work diligently to make sure we are operating to fulfill current orders, the orders that are necessary for the growing demand from our customers in the medical industry, and the produce market, I thank you so much for your bravery and your dedication. To our customers, we are here for you and we will continue to make our products, allowing you to ship your products to the consumers who need them so desperately. The men and women of Alliance Plastics are here for you, and we will give this fight our fullest measure.

We wish all of you to be safe and to have good health!

We invite you to spend a minute to look at our Steelflex 2.0 Elite Partnership Program. Now would be a great time to get on board!

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Ron Grubbs, Jr.