Supply shortages of polymer resin have hit 90% of European converters, threatening the manufacture of numerous end products, the European Plastics Converters (EuPC) trade group has said.
Plastic polymer pellets
The EuPC said that more than 50,000 small and medium enterprises (SMEs) were under "severe pressure", in light of the effects of the Covid-19 pandemic, and now facing a scarcity of raw materials that was driving up production costs.
"This situation is threatening the economic survival of numerous SMEs but also endangering 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," the trade association said in a press release.
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The polymer supply shortage has been brewing since Q4 2020 when the supply length in the market led to falls in imports. At the same time, competitive pricing led to an increase in exports. This soon shortened the market length and drove up prices substantially at the start of 2021.
"Europe is a net importer for polymer raw materials and is therefore above-average vulnerable to market disruptions," said Ron Marsh, Chairman of the Polymers for Europe Alliance.
He added not only were shortages the result of an improving global economy as well as a rise in exports, but there were also other factors at play.
"Logistical problems due to a shortage of containers to Europe also contribute, as does the lower production of plastics 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," said Marsh.
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The EuPC claimed that over 90% of plastics converters had been affected with many having to turn away new customers, and some unable to fulfil existing agreements.
"If this situation continues further, the supply of essential goods for the food and pharmaceutical industries will no longer be guaranteed," the trade group said.
A switch to recycled material would only have limited feasibility due to legal safety regulations and quality requirements, it added, saying: "Recyclates are not available in sufficient quantities and consistent quality yet. Where recyclates are established alternatives, prices are rising significantly to parallel virgin material - and availability is declining."
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