Domestic price of plastic and rubber products

IBISWorld expects the domestic price of plastic and rubber products to increase by 3.6% in 2025-26, to reach 166.8 index points. Domestic manufacturers have faced rising wage costs, prompting them to pass on cost pressures and raise the prices of plastic and rubber products. Crude oil and rubber are the key inputs for plastic and rubber products. The world price of crude oil is forecast to jump in 2026 amid military action in the Middle East, disrupting tanker traffic through the Strait of Hormuz, one of the world's most important oil shipping routes. Rubber prices are expected to rise in response as synthetic rubber is crude-derived and major rubber-producing countries like Thailand and Vietnam rely heavily on crude oil imports from Gulf states. This comes after a sharp increase in early 2025, driven by adverse weather conditions in key Southeast Asian production regions that disrupted global supply. These factors are expected to pressure producers' input costs this year and raise output prices as manufacturers seek to preserve margins amid fierce import competition. The events in the Middle East are only set to support the long-term growth in the domestic price of plastic and rubber, buoyed by higher input costs of like oil and producers' tendency to maintain margins. Higher global rubber and crude oil prices will continue to impact high-cost pressures across the Australian economy, which will place pressure on plastic and rubber product prices upwards.

The pandemic significantly influenced the packaging industry, as self-isolation measures constrained global plastic product production in 2019-20. As a result, Australian manufacturers turned to domestic plastic product producers. While plastic production rebounded in 2020-21, supply chain disruptions prompted many manufacturers to source from domestic producers to build supply chain resilience. These factors fuelled greater demand from Australian manufacturers, contributing to growth in the domestic price of plastic and rubber products in 2020-21. In 2021-22, strong growth in the global price of crude oil, driven by the impact of the Russia-Ukraine conflict, has flowed through to the domestic price of plastic and rubber products. As Russia is a leading supplier of crude oil, sanctions and restrictions imposed on Russia placed significant upwards pressure on the world price of crude oil. Other countries have increased crude oil production to offset these sanctions, which has stabilised crude oil prices, though they remain elevated in 2022-23. High inflation in Australia has also driven large price increases, particularly in 2022-23, when the price of plastic and rubber products soared by 10.7%. Global supply conditions normalised for a brief moment over the two years through to 2024-25, leading to input price pressures easing.

In 2025-26, the conflict between the United States and Iran is expected to contribute to volatility in global crude oil markets, which are expected to flow through to higher domestic prices for oil-derived products like plastics and synthetic rubber. Iran is a significant oil producer in the Middle East and fears of supply disruptions or restrictions on shipping through the Strait of Hormuz have placed upwards pressure on global oil prices. Heightened geopolitical risk has also raised energy and freight costs across international supply chains. While increased output from other major producers has helped prevent severe shortages, crude oil prices have remained elevated, lifting production costs for plastic and rubber products that rely heavily on petroleum-based feedstocks. IBISWorld forecasts the price index of plastic and rubber products to grow at a compound annual rate of 6.3% over the five years through 2025-26.