At least six European resin makers have declared force majeure on polyethylene, polypropylene and related products since mid-March, leading to higher resin prices throughout the region.
Force majeure sales limits are in place for the following firms and locations:
• Borealis, for PE and PP at its site in Schwechat, Austria, as of March 18.
• LyondellBasell, for high density PE at its site in Munchsmunster, Germany, as of March 25 and for PP at its sites in Tarragona, Spain, and Ferrara, Italy.
• Sabic, for an high/linear low density PE swing line at its site in Gelsenkirchen, Germany, as of March 30.
• Versalis, for an LDPE/EVA swing plant at its site in Dunkirk, France, as of early April.
• Total Petrochemicals, for HDPE at its site in Gonfrieville, France, as of April 2.
• Lukoil, for ethylene and propylene feedstocks at its site in Budyonnovsk, Russia, as of April 7. The site has had operating problems for more than a year.
In addition, the European acrylic resin market is recovering from a 16-day force majeure event that affected a methyl methacrylate feedstock plant in Billingham, England, during February.
These outages have caused material prices to rise well beyond increases in feedstock prices. Three regional trade groups in recent weeks have criticized the practice of declaring force majeure.
The European Plastics Converters Association in Brussels is warning that the shortages could prompt processors to shift production away from the area. Managing Director Alexandre Dangis has said that the shortages are particularly damaging at a time when many EU states “are trying to claw their way back to recovery.”
He added that he's afraid that the force majeure could well lead to processing companies departing the EU to re-establish themselves in Asia where the polymer supply chain is more reliable. In the United Kingdom, the British Plastics Federation and director general Philip Law also have warned that processors are facing shortages of key materials.
In Germany, the trade group IK said that the number of force majeure cases have reached “epidemic proportions.” Officials there have added that a lack of information from resin suppliers makes it hard to know if true force majeure conditions have been met.
The German plastics packaging market is improving in early 2015, but IK officials said that this positive development could be under threat if raw material suppliers are unable to meet their contracts.
Deliveries that have already been accepted are being cancelled, they added, and when deliveries are made, they are coupled with significant price hikes, despite the continuing moderate cost of crude oil.
David Platt, a correspondent for Plastics News Europe, contributed to this report.