EuPC sets up 'Alliance for Polymers for Europe' to fight ‘unjustified' polymer crisis
For the past four months polymer producers have declared some 40 ‘forces majeures’ between the beginning of March and June due to technical problems, electrical issues, maintenance problems and due to the lack of supply of ethylene, (a monomer used to produce polymers).
Shortages see prices spiral
The four organisations claim the crisis has brought about shortages that have seen prices spiral for example PE has gone up from 1 215 €/T January 2015 up to 1 690 €/T in June.
PP January 2015 was 1 230 €/T and came to 1 605 €/T in June and packaging manufacturers and polymer users are in desperate need of reliable information about scheduled delivery times and expected tonnages.
The four organisations are members of EuPC (European Plastics Converters) and Michael Kundel, president, EuPC (European Plastics Converters) said it recently set up an Alliance for Polymers for Europe, during its General Assembly in Warsaw to bring all forces together to fight this ‘unjustified situation’.
“It seems after months of low oil prices the petro chemical industry appears to be clawing back margins in the polymer value chain by stopping some crackers in Europe one after the other,” said Kundel.
“This situation is very serious, risking future customers for raw material producers and raising several antitrust concerns. Due to the increased pressure of several trade associations, users, OEMs and brand owners, the EU authorities are starting to look deeper into these force majeure situations.”
Elipso (France), IK (Germany), BPF and PAFA (UK) said the crisis has been made worse due to the attractiveness of the dollar zone for producers normally supplying the European market.
Network of national plastics associations
It claims the unprecedented number of ‘forces majeures’ with numerous declarations of technical problems are a clear demonstration long term investment by polymer producers in Europe is desperately required as the producers are unable to meet local market requirements.
The Alliance for Polymers for Europe will provide information on the current polymer market and assist raw material users through its network of national plastics associations, as well as assist companies in requesting suspension of certain EU import duties to relieve the current shortages on polymer markets.
The Alliance will also initiate a study on the aging of polymer sites in Europe, together with industry and independent experts, to provide more transparency on the future development of the polymer production sites in Europe.
According to existing market intelligence, some sites had more than 11 force majeure declarations in two years and the situation is not improving.
EuPC Annual Meeting in Lyon, France
The Alliance will also discuss potential legal assistance for companies that have no choice but to seek legal action against their polymer suppliers due to erroneous force majeure declarations.
Legal action will look at contractual obligations. The Alliance will also stimulate discussions on EU-wide customers’ satisfaction.
The Alliance will take the form of a European coalition, beyond the plastics converting industry, and will be open to all companies and associations in Europe that need more information on how to supply their business with polymers in the next 5-10 years. A search for more material to be imported from outside the EU (where more modern production sites exist) will be conducted, as well as the potential setting up of group purchasing platforms (in compliance with EU competition law).
A Polymers for Europe Alliance website is now live in partnership with Polyglobe and the Swiss based King & Spalding law firm through the website of Polymer Comply Europe.
The best polymer supplier for Europe will be announced next year in 2016 during the EuPC Annual Meeting in Lyon, France.