PLASTICS PROCESSING EUROPE
PCE warns of dangers from energy surcharges / Plastics converters may choose to exit Europe
 PCE warns that energy surchages could hurt not only converters but also resin makers in the long run (Photo: PantherMedia/gopixa) |
European plastics industry organisation Polymer Comply Europe (PCE, Brussels / Belgium; www.polymercomplyeurope.eu) has warned about the possible detrimental impact of energy surcharges being levied by plastics suppliers. Around the time producers began announcing this extra fee, Plasteurope.com examined the possible dangers and pointed out that resin makers could be deciding to use the energy surcharge to support margins because increases in actual polymer prices are difficult to enforce when raw material costs are moving sideways, or even downwards (see Plasteurope.com of 18.10.2021).
Thanks to a “semblance of normality” that has over the past few months returned for most European converters, PCE said most materials have become readily available and pricing has begun to reflect this situation.
While noting that rise in the cost of energy cannot be disputed, PCE said such shifts are an integral part of contract prices and market indices, which are the basis of converters’ pricing for their customers.
Also read: ifo Institute says supply of raw materials in Germany has improved
However, the surcharges represent a real problem for shops, it explained. “These increases are of a scale that would nullify the margins of many converters, which notoriously survive on very meagre levels of profitability. In short, polymer suppliers who are proposing these additional costs cannot but know that they are trying to apply penal and unrecoverable costs to their customer base which will decimate the conversion industry.” The group went on to point out that fees charged now by resin makers could even end up hurting them later.
The push toward tacking energy surcharges on to resin prices and the rising number of coronavirus cases in some European countries are bound to impact the already volatile prices for most polymers, the industry group said. “The coming weeks will show how the issue plays out and whether the forces of nature with which we have all had to wrestle are now going to give way to a series of ‘own goals’, which could be even more damaging to the whole supply chain.”
At the same time, PCE is not ruling out the possibility of more plastics converters leaving Europe for regions where manufacturing processes are less well-regulated, even if supply chains are inevitably longer.
Thanks to a “semblance of normality” that has over the past few months returned for most European converters, PCE said most materials have become readily available and pricing has begun to reflect this situation.
While noting that rise in the cost of energy cannot be disputed, PCE said such shifts are an integral part of contract prices and market indices, which are the basis of converters’ pricing for their customers.
Also read: ifo Institute says supply of raw materials in Germany has improved
However, the surcharges represent a real problem for shops, it explained. “These increases are of a scale that would nullify the margins of many converters, which notoriously survive on very meagre levels of profitability. In short, polymer suppliers who are proposing these additional costs cannot but know that they are trying to apply penal and unrecoverable costs to their customer base which will decimate the conversion industry.” The group went on to point out that fees charged now by resin makers could even end up hurting them later.
The push toward tacking energy surcharges on to resin prices and the rising number of coronavirus cases in some European countries are bound to impact the already volatile prices for most polymers, the industry group said. “The coming weeks will show how the issue plays out and whether the forces of nature with which we have all had to wrestle are now going to give way to a series of ‘own goals’, which could be even more damaging to the whole supply chain.”
At the same time, PCE is not ruling out the possibility of more plastics converters leaving Europe for regions where manufacturing processes are less well-regulated, even if supply chains are inevitably longer.
16.11.2021 Plasteurope.com [249018-0]
Published on 16.11.2021