Raw Material Prices – Real Changes or Demand Manipulation?

Are Raw Material Prices Really Rising, or Is It Just Market Strategy?

In recent years, many companies in the plastics processing and recycling industry have been closely following announcements regarding changes in raw material prices. Manufacturers regularly announce both price increases and temporary reductions, justifying them with demand fluctuations, energy market conditions, or transportation costs. However, more and more business owners are noticing that actual price changes do not always align with these announcements.

Moreover, purchasing strategies in many companies are evolving—fewer businesses are stockpiling raw materials far in advance, instead adjusting purchases based on actual orders. This shift is altering how pricing mechanisms work compared to just a few years ago.

Are Raw Material Prices Actually Increasing?

In theory, raw material prices should follow the classic rules of supply and demand. If a material is scarce, prices rise. If demand decreases, prices should fall. However, in practice, we see that raw material producers use various mechanisms to control the market and influence their customers’ purchasing decisions.

One of the most common strategies is announcing upcoming price increases. For example, polymer suppliers often inform the industry about planned price hikes, citing oil price fluctuations, logistics issues, or increased demand for a given material. These announcements appear in industry media and are sent directly to customers. Their purpose is to encourage companies to buy materials earlier before the supposed price increase takes effect.

However, in many cases, after a few weeks, it turns out that the actual price increase is much smaller than announced—or does not happen at all. Companies that rushed to purchase materials might later realize they could have bought them at a lower price if they had waited.

On the other hand, when demand drops, some suppliers use the opposite strategy—temporarily lowering raw material prices to stimulate sales. Processing companies that did not originally plan to buy at that moment may be tempted by “promotional” prices and increase their stock levels, allowing suppliers to maintain sales during weaker periods.

Changes in Purchasing Strategies

In the past, it was standard practice for many production facilities to stockpile raw materials for several months in advance to protect against potential shortages or sudden price increases. Companies would place larger orders, and warehouses were filled with materials waiting to be used.

Today, this strategy is shifting. More and more businesses purchase raw materials as needed, based on actual orders from customers. This change is driven by several factors:

✔️ Market uncertainty – After the experiences of the pandemic and the energy crisis, companies prefer to maintain greater financial liquidity rather than tying up capital in large stockpiles.

✔️ Better material availability – A few years ago, some polymers and additives had long lead times, forcing early purchases. Today, most materials can be obtained much faster, allowing for more flexible inventory management.

✔️ Avoiding the risk of price drops – Companies are reluctant to buy large amounts of raw materials if there is a risk that prices will decline in the coming weeks. Instead, they prefer to purchase smaller quantities and react flexibly to market changes.

✔️ Reduced production in many industries – Some sectors, particularly construction and automotive, are producing less than a few years ago. Lower production means lower demand for raw materials, reducing the need for large stockpiles.

How Can Companies Protect Themselves from Price Manipulation?

❗ Market Analysis – It’s essential to track actual changes in raw material prices and compare them with supplier announcements. Often, projected increases are exaggerated.

❗ Purchasing from Multiple Suppliers – Rather than relying on a single source, businesses should build relationships with multiple suppliers to gain greater flexibility in price negotiations.

❗ Avoiding Impulsive Decisions – If a supplier announces a price increase, companies should verify whether it affects the entire market or just that particular supplier.

❗ Production Optimization – Companies that manage their processes efficiently can reduce production waste and use raw materials more effectively, allowing them to buy less frequently.

Conclusion

Raw material prices fluctuate not only due to market forces but also as a result of marketing strategies and sales tactics used by suppliers. Announced price increases often serve to boost demand artificially, while actual price changes are often smaller than predicted—or do not occur at all.

Companies are adapting their purchasing strategies, increasingly buying raw materials only when they have actual orders instead of stockpiling large quantities in advance. This approach allows them to respond more effectively to real price changes and avoid unnecessary costs.

In today’s market conditions, smart purchasing management and careful price trend analysis are essential to avoid making hasty decisions and falling victim to market manipulation.

✅ Stay Updated – Subscribe & Join the Conversation!

I invite you to subscribe to my newsletter, where I share exclusive insights and news from the plastics processing and recycling industry.

📩 Don't forget to confirm your subscription via email! The articles in the newsletter will be unique and available only to subscribers – they will not be published on LinkedIn.

💡 As a subscriber, you can send in your own questions! I, or other experts from Rolbatch Laabs Academy, will answer them in future newsletter articles.

Here are the links to the LinkedIn groups I manage – feel free to join and share your content:
🔗 Plastics & Recycling Business Groups

And here are the blogs I run on LinkedIn:
🔗 Plastics, Recycling & Energy Blogs