Polymer Supply Crisis

Posted on 12 Mar 2021

It is apparent that the availability of polymer resin for plastic packaging is deteriorating fast, in particular for polyolefin grades (PP and PE). The European Flexible Packaging Association in Germany has joined with the French Packaging Association, Elipso, to call on the Petrochemical Industry during these difficult times, when the entire population is so dependent upon the safe and stable supply of food and medical products, ‘not to take the end consumer hostage’.

The French Association refers to the ‘daily struggle’ for supplies. Whilst the polymer resin suppliers insist that these supply problems are due to the impact of winter storms in the US allied to the ‘dilapidated nature of their installations’, the Germans believe the concentration of ‘Force Majeure’ in Europe, associated with ‘closures for maintenance’, is not coincidental. This is leading to unreasonable price increases, and increasing shortages of supply, across Europe. Here in the UK, we appear to have a similar deteriorating situation, with this week’s notification from Manucor of the following restrictions.

1. They will not take orders from any company who has not traded with them over the past 6 months.
2. That orders from existing customers cannot be accepted above the average tonnage taken over the last 6 months.
3. All orders received with a request for delivery after April 2021 will only be accepted with an open price to be agreed on dispatch.

There is an option to cancel orders if the price prevailing at that time is unacceptable to the customer. This notification implies rationing of supply and reflects the current polymer resin supply for flexible packaging situation worldwide. We have spoken to virtually all of our known supply portfolio, including those in China, India, and South America. We do not source film from some of these countries, but who have in the past, shown an interest in supply.

In virtually every case, there are no supplies available, whilst sources in the Middle East, Turkey and Europe are quoting price increases up to £800-£1,000 per tonne, higher than in January, with no guarantee of a fix on those prices, or agreed delivery dates.

In addition Jindal have notified customers they will not be using available polymer for metallised films and will not be producing their standard Co ex (MB400).

There is no doubt therefore that this crisis is real and whilst we are confident that our existing suppliers will continue to support us through these difficult times, we would welcome approaches from any other film suppliers who have material available. We would also welcome any opinions or information on how long the current supply situation is likely to last.

In closing, we have been informed from a usually reliable source, that the polymer resin suppliers have not been particularly profitable over the last few years, other than during the peak of the demand of PPE supplies. They claim that their underlying sales volumes have fallen due to anti-plastic paranoia and that they will use this ‘correction’ to bring polymer resin supply and demand into balance at the new, higher prices (just like the old days).

Any thoughts you may have on this, or any other of the items noted would be welcomed.

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