Plastic resin shortage drives industry divide as costs surge

A sharp rise in plastic resin prices is squeezing manufacturers across Vietnam, particularly in the packaging sector, while exposing uneven impacts across the broader plastics industry as different segments rely on distinct raw materials.

Packaging producers, which depend heavily on polyethylene (PE) and polypropylene (PP), are bearing the brunt of the surge, while construction plastics firms - more reliant on polyvinyl chloride (PVC) - have so far been partially insulated. High-density polyethylene (HDPE), meanwhile, is becoming less attractive for end users as prices continue to climb.

Packaging firms face supply squeeze

As petrochemical by-products, PE and PP prices are closely tied to crude oil fluctuations and supply dynamics. Recent shortages and rapid price increases have pushed up packaging costs, feeding into broader consumer price pressures.

Retailers have reported notable increases in the price of plastic bags, with wholesale prices rising from around VND40,000 per kilogram to about VND55,000 ($2.1). While the increase per unit is small, it has significantly raised operating costs.

Business owners say supply disruptions are compounding the issue. A dry ice producer named Huyen in Ho Chi Minh City said packaging costs had risen 40-50% in just one month, while suppliers have struggled to deliver previously agreed volumes. Her business uses a lot of styrofoam boxes (made from PS plastic), which also significantly increases costs, thus narrowing the profit margin.

Similarly, a glue manufacturer named Hiep said production had been disrupted due to a shortage of plastic caps, despite being willing to pay higher prices. Suppliers cited limited availability and rationed distribution among customers.

Despite rising input costs, many businesses have refrained from raising selling prices for fear of losing customers, opting instead to absorb margin compression.

Data from China-based SunSirs, a leading provider of commodities data and financial information, shows that prices of LLDPE and LDPE have risen about 40% since late 2025, while PP has surged as much as 50%. These materials are key inputs for plastic packaging.

For companies such as An Phat Bioplastics JSC (stock code; AAA), lower resin prices in 2025 helped offset declining revenue, but the rebound in input costs in 2026 is expected to erode margins.

In 2025, as PE and PP plastic resin prices declined, although revenue decreased by more than VND2 trillion ($75.9 million) to nearly VND10.73 trillion ($407.13 million), gross profit still increased slightly from over VND1.48 trillion to over VND1.49 trillion ($56.62 million).

However, in 2026, with the sharp increase in plastic resin prices, cost pressures on this company could rapidly escalate. Financial reports show that at the end of 2025, the company had approximately VND400 billion ($15.18 million) in raw material inventory and VND125 billion in goods in transit. With the cost of goods sold at around VND4.5 trillion ($170.78 million) per year, this inventory may only be sufficient for about 1-2 months of production.

With limited inventory covering only one to two months of production, firms face increasing pressure if price adjustments lag.

Uneven impact across segments

The impact of rising resin prices varies across the industry due to differences in material usage. While packaging relies on PE and PP, construction plastics manufacturers depend more on PVC and HDPE, which follow different pricing dynamics.

In recent weeks, several pipe manufacturers, including Euro Pipe, Dekko and Thuan Phat, have raised prices, particularly for HDPE products, citing higher input and transportation costs.

Super Truong Phat Plastics Group said HDPE resin prices had risen 30-40%, forcing multiple price hikes within a week and raising concerns over delivery timelines due to supply constraints.

Major listed firms such as Binh Minh Plastics JSC and Tien Phong Plastic JSC have also adjusted HDPE product prices in response to tightening supply and rising costs.

However, HDPE accounts for only a small share - around 10-15% - of revenue at these companies, with PVC products remaining the primary profit driver.

Binh Minh Plastics (stock code: BMP) benefits from access to raw materials within Thailand’s SCG ecosystem, supporting lower input costs and strong margins.

In 2025, with revenue of approximately VND5,500 billion ($208.75 million) and gross profit of VND2.54 trillion ($96.37 million), Binh Minh's gross profit margin reached approximately 46%.

Meanwhile, Tien Phong Plastic recorded a gross profit margin of approximately 31% with revenue of VND6.75 trillion and gross profit of over VND2.09 trillion.

High selling expenses - roughly VND600-700 billion ($26.57 million) annually at both firms - provide a buffer, allowing companies to absorb part of the cost pressure or adjust margins within distribution channels.

Inventory and resilience

Inventory levels are a key factor in determining resilience to raw material price shocks.

Tien Phong Plastic held more than VND1 trillion ($37.96 million) in raw material inventory at end-2025, enough to sustain production for two to three months. Binh Minh Plastics maintained lower inventory, at around VND200 billion, but benefits from more stable supply access.

According to SunSirs, HDPE prices have risen about 45% since the start of the year, compared with a roughly 31% increase in PVC, highlighting uneven cost pressures across materials.

Similar to the case of AAA, inventory size is a crucial factor in assessing a company's resilience to fluctuations in raw material prices.

Financial reporting data shows that NTP maintained raw material inventory exceeding VND1 trillion ($37.96 million) at the end of 2025. With an annual cost of goods sold of nearly VND4.66 trillion ($176.82 million), the company is expected to be able to maintain production for about 2-3 months without needing to replenish raw materials.

Structural shift under way

Overall, rising resin prices are driving a clear divergence within the industry. Packaging firms face direct margin pressure from PE and PP, while construction plastics companies retain some buffer thanks to PVC and existing inventories.

However, this advantage may prove temporary if supply constraints persist and price increases spread further, eventually feeding into PVC - the key determinant of profitability in the pipe segment.

For packaging firms like AAA, the situation may accelerate a shift towards biodegradable and recycled plastics to reduce reliance on virgin resin and meet tightening export market requirements.

In contrast, construction plastics firms like BMP and NTP, though less exposed to sustainability pressures due to longer product lifecycles, remain vulnerable to PVC price volatility.

Global policy trends are reinforcing this shift. Negotiations on a Global Plastics Treaty in mid-March have continued to push for a full lifecycle approach, including higher recycling rates, standardized packaging design, and increased use of recycled materials.

As a result, recycling is no longer optional but is increasingly becoming a core component of the global plastics supply chain.