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Materials shortages harming UK processors

Materials shortages harming UK processors
BPF director-general Peter Davis said: “Just at the time that strong evidence of a recovery in companies' performance is emerging it is extremely disappointing that companies lack the confidence to engage in business development projects because of faltering raw material supply.”

Pain is being felt most among plastics packaging manufacturers in relation to the availability of PE and PP. Users of blow moulding grades of HDPE have seen their raw material costs increase by more than 30% in the year to May and buyers of PP saw increases by as much as 50% in the same period.

According to the BPF, the pace of recovery has taken the industry by surprise. There has also been a surge in demand in China, which has absorbed huge quantities of plastics raw materials. Overall annual demand there is as now as much as 50 million tpa.

There has also been a succession of 'force majeure' situations announced by some raw material suppliers that have exacerbated the situation.

“It is extremely important that the end customers buying and using plastics products, whether they be food retailers or car manufacturers, realise the very real pressures that our processing members are under and reflect this sympathetically in their negotiations with their suppliers,” added Davis.

The BPF points out that longer term investment trends in raw material production are pointing more towards the Middle East and Far East where there is a perception of faster growth. This was highlighted in the recent KPMG study, The Future of the European Chemicals Industry, which anticipates a 26% reduction in cracker capacity in the EU by 2015.

Source: British Plastics Federation (BPF).