The German trade association for plastics packaging converters has added its voice to the growing criticism of polymer suppliers declaring force majeure on supplies.
The IK Industrievereinigung Kunststoffverpackungen trade body said: “In recent weeks, the number of cases of force majeure registered by raw materials producers in Europe has reached epidemic proportions. Such reports have so far contained no detailed information and consequently make it difficult to ascertain whether the criteria for force majeure have actually been met.”
The Bad Homburg-based IK made its critical remarks in a statement connected with its regular update in which it said German plastic packaging manufacturers are predicting a continued upswing in their business for the second quarter of 2015.
“This positive development is under threat, however, due to the fact that major raw material suppliers currently consider themselves no longer able to meet their contractual obligations towards packaging manufacturers. Deliveries that have already been accepted are being cancelled. When deliveries are made, they are coupled with significant price hikes, despite the continuing moderate cost of crude oil. An end to this price spiral is not in sight.
“Cases of force majeure presuppose an ‘act of God,' that is, an influence from outside which is completely unrelated to operational circumstances. Merely claiming the occurrence of ‘incidents' or ‘technical problems' is generally not sufficient.”
It highlighted the difficulties that current polymer shortages and rising prices present have on small to medium-sized manufacturers of plastic packaging. “Since raw materials account for a large proportion of costs — up to 70 percent — margin losses represent a potential existential threat,” said IK.
The statement follows similar concerns from Brussels-based European Plastics Converters Association (EuPC) and the British Plastics Federation, both warning that polymer processors and compounders could be damaged by the current material shortages.