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Christmas Comes Early — but Not in a Good Way — for Toymaker
Learning Resources Buys Month's Worth of Polyethylene as Iran War Squeezes Plastic Supply and Tariffs Threaten Higher Costs
Surging prices for plastic caused by disruptions from the Iran war have pushed one U.S. toymaker to buy up more inventory than needed before the conflict boosts costs even higher.
Factories in China, Vietnam and India have seen price hikes as high as 55% for materials like low-density polyethylene, a widely used plastic, according to Rick Woldenberg, CEO of Learning Resources. There have also been reports of shortages, he said.
“We’re concerned about supply for Christmas,” Woldenberg said. That’s why he bought about a month’s worth of goods earlier than usual. The company is “spending money ahead of the problem rather than waiting and seeing what happens.”
Despite the higher costs, the toymaker is trying to keep consumer prices steady, according to Woldenberg. So far, the factories the company works with are taking on much more of the burden, he said.
Woldenberg also is trying to stock up ahead of what he expects will be higher U.S. tariffs later this year. The toymaker has been on the front lines of the pushback against President Donald Trump’s trade policies. The firm was a lead plaintiff in the Supreme Court case thatstruck downsome of Trump’s levies.
“The president said he has every intention to tax me, and tax me more,” Woldenberg said.
The war has disrupted the supply chain for the plastics industry, and that’s hurt production of petrochemicals used in lots of manufactured products.
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Educational toys in Vernon Hills, Ill. (Jenny Bohr/Bloomberg)
Suspended Shipments
While the U.S. petrochemical market is more insulated, consumer packaging firms are already feeling the strain, as suppliers in Asia suspend shipments and spot prices for everything from ethylene to methanol and polymer-grade propylene havesoared.
Benchmark oil and gas pricesApril 8 after the U.S. and Iran agreed to a two-week ceasefire designed to halt the conflict in exchange for reopening the Strait of Hormuz, a key artery route through which roughly a fifth of global oil and liquefied natural gas flow.
Even so, it remains unclear whether tanker traffic will resume through the choke point, which remains largely blocked. Continued fighting in the Middle East — stressed by ongoing Israeli attacks in Lebanon — tempered expectations for a lasting resolution April 8.
Even when the strait opens, any supply recovery will be gradual. Output has been curtailed at oil and gas fields, refineries have reduced or halted operations, and some key petrochemical facilities have been damaged in strikes.
That means that petrochemicals costs aren’t likely to see immediate relief and that plastics aren’t necessarily getting any cheaper. Jim Fitterling, CEO at Dow Inc. — the largest U.S. petrochemical company — warned last month that it could take as long as nine months for Persian Gulf petrochemical flows to return to normal once Hormuz reopens.
