EU Plastics Converters Sound Alarm over Resin Shortages and Soaring Prices
More than 90% of plastics converters polled in Europe said that they are affected by the supply crisis, with many of them reducing production and turning away new customers to honor existing agreements.
April 13, 2021
The proverbial rising tide that lifts all boats doesn’t seem to be working out for Europe’s plastics converting industry. The sector is experiencing “severe shortages of raw materials and [unprecedented] price increases,” according to the European Plastics Converters (EUPC) association. The shortages are caused by an “improving global economy” combined with exports of material to Asia and North America, according to EUPC, which is driving up prices.
The predicament is having a significant impact on small to medium-size (SME) businesses, which are fighting for their economic survival, said EUPC in a press release distributed today. Manufacturers of plastic products across Europe have suffered from bottlenecks in the materials supply chain since the beginning of the year, affecting polypropylene, polyethylene, PVC, along with other plastics and additives. The disruption, added the EUPC, is a manifestation of Europe’s supply/demand imbalance.
“The serious market disruptions currently taking place all over Europe are a symptom of the structural imbalance in Europe between the local production of and demand for raw materials and additives,” said the EUPC. “Without restoration of that balance, periodic recurrence of gross disruption of the production chain is highly likely. Ultimately, end customers will also suffer damage due to disruptions in the delivery of (semi-)finished products.”
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As a net importer of plastics, Europe is especially vulnerable to market disruptions, added Ron Marsh, Chairman of the Polymers for Europe Alliance. In addition to the global economy heating up and demand on the rise, a shortage of Europe-bound shipping containers is compounding the problem. The demand for certain raw materials used in personal protective equipment because of COVID-19 is extremely high, said Marsh. “In addition, we see an unprecedented number of declarations of force majeure.”
Europe’s plastics converting industry is composed of more than 50,000 SMEs. Still recovering from the effects of the pandemic, they are now being hammered with soaring resin prices, when they can even source needed materials. The EUPC reports that recent surveys conducted among plastics converters in EU member states have shown that “more than 90% of them are affected by this supply crisis, and many are forced to reduce production and accept [fewer] customers to honor their existing agreements. If this situation continues further, the supply of essential goods for the food and pharmaceutical industries will no longer be guaranteed,” cautioned the EUPC.
The association also pointed out in the release that switching from virgin resin to recycled materials is not a viable alternative in many applications. Safety regulations, technical issues, and quality requirements often preclude their use, and, where they can be used, recyclates typically are not available in sufficient quantities or of consistent quality, said the EUPC.
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