Processors held back by material shortages, says BPF
Monday, 19 July 2010
Published: 19th July 2010
Shortages of some key polymers and associated raw material price increases are holding back sectors of the plastics processing industry, the BPF said today.
BPF Director-General Peter Davis added, 'Just at the time that strong evidence of a recovery in companies' performance is emerging it is extremely disappointing that companies lack the confidence to engage in business development projects because of faltering raw material supply'.
Whilst there are issues across the board the pain is being felt most among plastics packaging manufacturers in relation to the availability of Polyethylene and Polypropylene. Users of blow moulding grades of High Density Polyethylene have seen their raw material costs increase by over 30% in Euros in the year May 2009 to May 2010 and buyers of Polypropylene saw increases by as much as 50% in the same period.
The BPF went on to explain the reasons for this situation. First of all, the pace of recovery has taken the industry by surprise. There has also been a particular surge in demand in China which has absorbed huge quantities of plastics raw materials. Overall annual demand there is as now as much as 50 million tonnes per annum.
Secondly, some raw material suppliers have reported events described by them as ‘force majeure’ situations. There has been a reduction of polymer production capacity, de-stocking and an exacerbation of the supply position.
Thirdly, the BPF points out that longer term and globally, investment trends in raw material production are pointing more towards the Middle East and Far East where there is a perception of faster growth. This was a point made in the recent KPMG study, 'The Future of the European Chemicals Industry', which anticipates a 26% reduction in cracker capacity in the EU by 2015.The BPF says that ongoing access to secure sources of key plastics raw materials raises strategic issues for both EU and UK governmental institutions.
Davis said, “It is extremely important that the end customers buying and using plastics products, whether they be food retailers or car manufacturers, realise the very real pressures that our processing members are under and reflect this sympathetically in their negotiations with their suppliers.”
BPF Director-General Peter Davis added, 'Just at the time that strong evidence of a recovery in companies' performance is emerging it is extremely disappointing that companies lack the confidence to engage in business development projects because of faltering raw material supply'.
Whilst there are issues across the board the pain is being felt most among plastics packaging manufacturers in relation to the availability of Polyethylene and Polypropylene. Users of blow moulding grades of High Density Polyethylene have seen their raw material costs increase by over 30% in Euros in the year May 2009 to May 2010 and buyers of Polypropylene saw increases by as much as 50% in the same period.
The BPF went on to explain the reasons for this situation. First of all, the pace of recovery has taken the industry by surprise. There has also been a particular surge in demand in China which has absorbed huge quantities of plastics raw materials. Overall annual demand there is as now as much as 50 million tonnes per annum.
Secondly, some raw material suppliers have reported events described by them as ‘force majeure’ situations. There has been a reduction of polymer production capacity, de-stocking and an exacerbation of the supply position.
Thirdly, the BPF points out that longer term and globally, investment trends in raw material production are pointing more towards the Middle East and Far East where there is a perception of faster growth. This was a point made in the recent KPMG study, 'The Future of the European Chemicals Industry', which anticipates a 26% reduction in cracker capacity in the EU by 2015.The BPF says that ongoing access to secure sources of key plastics raw materials raises strategic issues for both EU and UK governmental institutions.
Davis said, “It is extremely important that the end customers buying and using plastics products, whether they be food retailers or car manufacturers, realise the very real pressures that our processing members are under and reflect this sympathetically in their negotiations with their suppliers.”
ENDS
For all media enquiries, BPF logo and images, please contact Rita Ogole, Senior Public Affairs Executive on 0207 457 5043 or email [email protected]
Notes to editor
British Plastics Federation (BPF) is the UK trade association for the plastics industry – representing the whole supply chain including polymer producers, distributors, additives suppliers, machinery manufacturers, processors and recyclers.
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