Raw material shortage continues

May 3th 2021

Source: ANAIP. The raw material shortage, detected for a long time by the processing companies, can jeopardize the supply of basic plastic products and is causing price hikes of raw materials. The European market for raw materials has been under high pressure for months and shortages and rising prices are influencing the manufacture of plastic products.

After the situation experienced by the pandemic, the demand for polymers had reactivated in the second half of 2020, but, when transformers have started to increase their production, they find that the supply of raw material is not growing in the same way.

The European plastics transformation sector has been immersed in the greatest crisis of scarcity of raw materials and higher prices in recent years for more than four months. A situation that has forced many companies to stop production lines, delay delivery times and increase the cost of their final products, as reported by the Spanish Association of Industrial Plastics (Anaip), which has conducted follow-up surveys of this situation.

"The excessive price increase of raw materials, the difficulty to pass it on and the shortage we are experiencing puts at risk the viability of the transformation sector and an important part of the value chain - he explains Luis Artola, CEO of Plastigaur and member of the Board of Directors and Executive Committee of Anaip–. The shortage of raw material forces us in many cases to have to stop machines and this can lead to the food not reaching the supermarket due to lack of packaging or the medicines not reaching the pharmacies ”.

This crisis of raw materials affects all of Europe and also the United States, where the shortage began in mid-2020. In Europe the process started later and has reached its peak during the spring. According to the data of the european association of plastic transformers, EuPC, the European countries that are experiencing the most difficulties are Portugal, France, United Kingdom, Germany, Netherlands, Croatia and Greece.

En SpainAccording to Anaip, 35% of the transforming companies affirm that polymers have risen more than 80% in April. The price increase has been between 61 and 80% for 22% of the transformers.

Source: ANAIP.

Experts advise against stopping buying raw materials although they will continue to rise in 2021

About a hundred professionals joined in the webinar "Raw Materials: Market Situation", organized by the Cluster of Innovation in Container and Packaging next to Valencian Association of Plastics Entrepreneurs (Avep). The meeting had the participation of three experts who have debated about the price of raw materials in the short and medium term: Julio Talens, territorial director from Howden; Ricardo García, of the business management staff of BCC-Cajamar Group, and Ramon Morell, CEO at Professional & Personal Assistants.

One of the great doubts of companies in these times is whether raw materials will continue to rise even more this 2021 and should wait to buy, or if there will finally be a shortage. In this sense, Julio Talens from Howden assured that, despite the fact that prices will continue to rise as a trend in 2021, "not buying raw materials would force companies to stop the production line, something that may be critical" and that Europe it should "try to be less dependent on imports."

Regarding the doubts about whether there will be a shortage, Julio Talens added that the economy may be in a "super cycle" and that the scarcity of raw materials creates an increase in purchases: "sometimes suppliers auction the merchandise and that is very worrying, and it could turn into a supply problem ».

Another key to overcoming this problem of rising raw material prices is to focus “on balance sheets and cash-flows. The operative box today commands a lot. Take care of your box. The income statements, being important, in the current context and situation are secondary, "said Ricardo García from BCC-Grupo Cajamar.              

For his part, Ramón Morell, CEO at Professional & Personal Assistants, declared that there is "a desire to invest, and there is money behind despite the crisis we are experiencing" and that "monetary policies will give us the push we need, raising inflation" . 

Finally, the experts have transferred that Spain has a very promising future that will depend on vaccination, bank liquidity, European aid and tourism, which, together with the restoration, will be strengthened.

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