Raw material shortages pose acute threat to European production- and the outlook is somber

EuPC has sounded a clear warning about the impact of the current situation on the raw materials market for the European converters.

The trade organisation, which represents the interests of Europe’s plastics converters, called today’s shortages and concomitant price escalation unlike anything seen in the industry before.

Not only does the situation threaten the economic survival of numerous SMEs  - already heavily impacted by the COVID-19 pandemic, it is also jeopardising the production of countless products, ranging from applications in the building and automotive industry to essential goods for the food packaging and pharmaceutical supply chains.

Manufactures across Europe have experienced serious supply bottlenecks since the beginning of this year.

“Europe is a net importer for polymer raw materials and is therefore above-average vulnerable to market disruptions,” said Ron March, chairman of the Polymers for Europe Alliance.

He explained that the current shortages were the result of the improving global economy, combined with exports of plastics from Europe to Asia and North America. These problems are currently being compounded by logistical problems - a shortage of containers to Europe - and the lower plastics production levels in the USA.

“Furthermore, the demand for certain raw materials used for protective articles against COVID-19 is extremely high. In addition, we see an unprecedented great number of declarations of force majeure,” he said.

According to EuPC Managing Director Alexandre Dangis the shortages have affected raw materials ranging from commodities to special additives crucial to the manufacture of compounds and plastic products.

“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. Without restoration of that balance, periodic recurrence of gross disruption of the production chain is highly likely,” he said.

The shortages have dramatically increased the cost of production and in some cases, threatening to halt this altogether.

Recent surveys amongst plastics converters in several Member States have shown that more than 90% are affected by the supply crisis. Many have already been forced to dial down production and accept few to no new customers , in order to be able to honour their existing agreements.

Switching to recycled material is in many cases not an option due to prevailing legal safety regulations, technical hurdles, and quality requirements. Moreover, recyclates in sufficient quantities and of a consistent quality are not yet available.

Where recyclates are established alternatives, prices are rising significantly to parallel virgin material - and availability is declining.