The Brussels based European Plastics Converters Association (EuPC), which represents European plastics compounders and processors, has announced that the recent series of force majeure declarations by some polymer suppliers to the European market could have very damaging effects. A force majeure declaration cites unforeseeable circumstances as a reason to cause a contract to go unfulfilled.
“We are receiving reports from our major national associations that compounders and processors are experiencing difficulty in obtaining adequate supplies of polymer to discharge contractual obligations towards their customers,” says Alexandre Dangis, EuPC’s managing director.
“This is particularly damaging at a time when many EU states are trying to claw their way back to recovery, and in particular when the EU plastics industry is in such a great position to be in the vanguard of growth with its potential to deliver customers and broader society carbon savings and resource efficiencies,” Dangis adds.
“I am afraid that the force majeure could well lead to processing companies departing the EU to re-establish themselves in Asia, where on the face of it a more favorable polymer supply situation persists,” he notes.
“Of course,” Dangis continues, “shortages spell out increases in polymer prices, which will need to be passed on down the customer chain. For plastics packaging manufacturers, as an example, the raw material component of the selling price of a pack accounts for as much as 60 percent.”
The failure to pass along these price increases, Dangis says, will put the viability of these manufacturing companies at serious risk.