Over the last months prices of various polymers have more than doubled. There are widespread shortages in the market for some materials, and this unique situation is expected to last for a while.. The price increase is exceptional: for example, the prices of PE and PP are breaking record levels. This turbulent market development Is influenced by a range of events.
And it is precisely the combination of all these events that makes this unique. Because the factors listed below occurred within a relatively short period of time, the rate of the price increase itself is extraordinary.
– The lower oil prices (in 2020) led to lower oil production levels and a Nafta shortage
– Scaled-down production and planned maintenance at polymer producers due to low demand in 2020
– Low inventory and increased demand for polymers
– Limited imports into the EU from China, USA and Russia, among others
– International logistics and transportation disrupted by the Covid19 virus
On top of this, extremes have occurred in recent months:
– Extreme winter weather in the USA, combined with power outages has caused a lot of downtime and damage. The start-up of these factories is taking longer than expected
– A number of force majeure situations at polymer producers, such as technical problems, unplanned maintenance as well as start-up problems.
One of the causes of disruption in the Polymers supply chain: extreme weather in Texas. (Photo: CNBC)
As a result, the situation regarding PE and PP raw materials has further deteriorated in recent weeks. Additional price increases are being announced, while moreover the availability of raw materials continues to decline.
The Oerlemans Packaging Group, as an important player, has close long-term relationships and a prominent position at our suppliers. Oerlemans Packaging has covered its raw material needs well with reliable contracts and thorough planning, but because this period of shortages remains unpredictable and the volumes supplied continue to decrease, not all orders will be available at the agreed delivery time, or are not available at all. The current and unique market development means that everyone is affected, no exceptions. Through good coordination and planning with our clients and suppliers, we work intensively together to minimize the disruptions for our customers.