Oil by-products also surge in price

Food containers, tyres cost more now; prices may increase further
Jermyn Chow, Straits Times 9 Jun 08;

EVEN consumers who do not own cars are being hit by the record highs in oil prices.

The humble plastic container used for that takeaway order at the hawker centre, for instance, could now add 10 to 20 cents to the cost of a meal.

It is made with plastic resin, which has shot up in price along with the rise in the price of oil.

Many hawkers no longer give these containers out for free.

Those in the Banquet foodcourt chain, who already charge 20cents for them, are now expecting to charge even more.

A tonne of plastic resin - enough to make about 200,000 McDonald's sundae cups - now costs $2,800, up from $2,200 five months ago.

Food sellers and hawkers now pay $46 - 15 per cent more than in January - for 500 plastic takeaway containers.

Many other everyday items - from polyvinyl chloride (PVC) in furniture upholstery to nylon - also come from oil by-products ethylene and polymer.

Singapore Plastic Industry Association president Roland Lim said the spiralling oil prices are 'beyond our control...We cannot absorb the hike any longer'.

Homegrown soya sauce manufacturer Tai Hua Food Industries is bracing itself for further oil-price hikes, which will bump up its manufacturing costs because of the plastic it uses in packaging, said its managing director Thomas Pek.

Smaller operators feel caught in the middle.

Chomp Chomp food centre dessert seller Cheng Ya Te is torn between passing on the cost of the takeaway containers to his customers - and losing them - and absorbing the cost of the small plastic tubs.

He is choosing the latter for now, he said, because when he tried charging for the containers two years ago, his regulars stopped buying from him.

They said 'it was unfair to charge them more for eating their dessert at home'.

Oil prices soared US$11 - the biggest one-day jump - to hit US$138.54 (S$189.25) a barrel last Friday. Firms manufacturing items from oil products have thus seen their production costs increase by 20 per cent.

Car-owners, already hit by higher petrol prices, are also having to pay more for tyres as oil-based products account for about 60per cent of the material cost for a tyre.

A mid-range 15-inch Continental tyre that cost $160 six months ago now costs $180.

Already, major tyre manufacturers, such as Bridgestone and Michelin, will raise prices here next month by up to 10 per cent in line with the prices in the US.

The Singapore Motor Tyre Dealers Association expects retail tyre prices to climb by up to 40 per cent by the end of the year if oil prices stay high.

Its chairman, MrLim Gek Choon, said retailers have been absorbing the extra costs for 'far too long' and will now pass them along to customers.

Motorists have reacted by holding off on buying new tyres, leading distributors here, like Bridgestone, Falken and Continental, to see sales slide by a quarter since January.

As driving on bald tyres, especially on wet roads, is unsafe, motorist Matthew Chan, 31, has one way around that. The marketing executive, who has not changed his car tyres in three years, said: 'The car still drives quite well but, if it rains, I just leave it at home.'