The Petrochemicals Shock That's Already Rippling Through Plastics
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What is the petrochemical supply chain behind everyday plastics?
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Hello and welcome to another episode of the OddLots podcast. I'm Tracy Alloway.
And I'm Joe Wiesenthal.
Joe, I have a prop for today. Prop episode. A visual learning aid for a podcast.
Okay.
I'm going to hold this up.
Yeah.
What is this?
It looks like a magenta marker.
Magenta? Yeah. It's pink. It's hot pink.
What's magenta?
It's like purplish pink.
Really?
Okay. Color is beside the point. It is indeed a highlighter. But more importantly, it is a result of a complex petrochemicals supply chain.
You're right. Magenta is more purplish. I don't know why I always thought it was a little bit more pinkish. But yes, you're correct. You're correct. You're totally correct.
I didn't intend your major takeaway from this conversation
to be the difference between pink and
magenta. Okay.
But yes, you're right. And without advanced chemicals of all sorts and oil and all that, you would never have the plastic shell of the marker and maybe even some aspects of what gives it color when you draw on something.
All right, so what is this plastic casing actually
made
of? This is a pop quiz.
That I definitely have no
idea. Okay, it starts from crude oil.
Yeah, that I, okay, yeah.
So crude oil distilled into...
Keep going.
Naptha.
Naptha, right, naptha.
And then naptha is, this is a hint, cracked into... Ethylene or propylene?
Yeah. We've actually done a plastics episode before. Yeah, I know, I know, I know, yeah.
Okay, and then it gets polymerized.
Yeah, of course.
Into polyethylene.
Right. And polypropylene. Right, yeah. And
then it gets chopped up into tiny little plastic pellets, which are, I know you know this one. What are they called? The little plastic pellets. One
of my
favorite words.
Go on.
Nerdles.
Nerdles. I remember all of this from that episode that we did. Nerdles.
The building blocks of highlighters and lots of other plastic products
would be nerdles.
Okay. So the reason we bring this up is obviously there's a situation in Iran. The Strait of Hormuz
is
still closed. We're recording this on March 24th. And we're starting to see a lot of the disruptions in the oil market start to, I guess, ripple out into
other
petrochemicals.
Right. And someone asked this on Twitter the other day, and they were like, Joe, is the higher price of oil going to impact the price of plastics? And I was like, I would be very surprised if it didn't.
I mean, I don't
really know for sure, but it would be very weird. It would be hard for me to imagine a scenario in which the key input doesn't. The thing that I am very curious about,
and
you described this sort of sequential chain of industrial processes from the oil to the nurdles. And of course, when we did the episode, one of the things that we've talked about is that there is a gap between the price of some of these end products and the implied price of crude oil. So crude oil, I don't know exactly where it is right now at this moment that we're recording it, but it shot up. But these end products have shot up even more. And our guest Rory Johnson had a really good explanation, which is that the refineries do not want to shut down. And so they're rationing, they're slowing their input, their input because it is very costly to shut down and ever restart should they ever run out, which is a prospect given that we're seeing a volumetric decline in the amount of oil available in the world.
What I'm curious about, which I don't know the answer, is whether this applies to all of the different processing steps along the way, which is, is there this sort of even greater price impact because the entities that do all these sequential industrial processes are slowing down because the shutdown and restart process is costly for them as well?
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Chapters
8 chapters
1
What is the petrochemical supply chain behind everyday plastics?
0:01–5:07
2
How does the Iran‑Hormuz crisis affect global polymer production?
5:07–12:22
3
What does a force majeure declaration mean for Asian crackers?
12:22–18:46
4
Why are polyethylene and polypropylene prices spiking right now?
18:46–26:34
5
How do feedstock choices (naphtha vs. ethane) influence plastic costs?
26:34–34:19
6
Can recycling offset the emerging shortage of virgin plastics?
34:19–40:34
7
What are the short‑term outlook and warning signs for the market?
40:34–47:13
8
How might the war‑induced disruptions reshape the global chemicals industry?
47:13–55:22
Speakers
6 identifiedMore from Odd Lots
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