Europe facing somber outlook over material shortages

The trade group European Plastic Converters (EuPC) has sounded a clear warning about the current situation on the raw materials market for the European converters.

The trade organization called current material shortages and related price escalation unlike anything seen in the industry before.

Not only does the situation threaten the economic survival of numerous molders, already heavily impacted by the COVID-19 pandemic, but also it is jeopardizing 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.

Manufacturers 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 Marsh, 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 reduced plastics production levels in the U.S. linked to winter storms.

"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.

EuPC Managing Director Alexandre Dangis said 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, threatened to halt manufacturing altogether.

Recent surveys among plastics converters in several European countries have shown that more than 90 percent 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 honor 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, recycled resins are not available in sufficient quantities and of a consistent quality.

Where recycled material is an established alternative, prices are rising significantly on them as well to nearly parallel virgin material, and availability is declining.