Madrid 17.02.2021. The plastic processing industries worldwide we face shortages and rising prices of raw materials since the end of 2020. The situation has been denounced by the main associations of plastic processors at international level, claiming that a scenario of artificial shortage is being created to generate a price increase, while the context of the pandemic has had a real impact on the production capacity of raw material manufacturers.
The situation, which affects plastic processing companies all over the world, has a special impact on Europe, which is facing increases of up to 50% in polymer prices. More than 60,000 companies in Europe and 3,000 in Spain are being directly affected. Considering that the vast majority of them are SMEs or micro-SMEs, the competitiveness of the sector is at stake at a critical moment. Companies are looking for supply options at reasonable prices that allow us to maintain competitiveness, and several have already announced that the rise in production costs could be passed on to the prices of their products.
On the other hand, from the National Association of the Plastics Industry -ANAIP- also warns that the shortage of supply may affect the supply of already processed products. In a context of pandemic where plastic products are becoming the first necessity, this is a particularly critical issue. Recently, the Financial Times reported how shortages of certain plastic products could jeopardize the COVID vaccine deployment strategy.
In 2015 the industry went through a similar scenario. At that time, it was pointed to an artificial shortage to push up prices. In leading plastic processing countries such as India, the association that brings together the main manufacturers denounced the situation and called for structural changes so that the market could operate in free competition. The association warned that the exponential growth in prices was threatening the survival of plastic processing companies.
However, the situation from 2020 onwards has been aggravated by the direct impact of the pandemic, which has led to a disruption in the productive capacity of feedstock manufacturers, with a substantial decrease and even a halt in the rate of production in many cases. The impact of the pandemic on global air and ground transportation, and consequently lower fuel demand, has also affected the generation of petroleum by-products. A significant number of feedstock producers cite force majeure causes for shortages in their production. This, coupled with an alarming shortage of natural gas in various markets, has created a perfect storm for the supply of raw materials.
The global situation has led to an increase in demand for all raw material producers. In Europe, which are few and concentrated, producers have increasingly turned their attention to the foreign market with the consequent price pressure, especially polyolefins and PVC for local converters. According to the latest news, the current shortage situation is expected to continue until July 2021, although raw material price increases are expected to be less marked from April onwards.
In the industry we are moving towards the use of post-consumer chemical recycling raw materials, which would alleviate the dependence on these polymers, but for now this transformation is incipient and the raw material is insufficient to supply the entire plastic transformation industry.