Are you feeling the impact of force majeures announced by raw material suppliers?
Seven supplier price increases, three of which announced two consecutive rises. Couple this with continuing disruptions in the supply chain means we are feeling the challenge here at PurePac. We are also advised that the situation is only likely to get worse before it gets better.
Restricted Raw Material Supplies
The restrictions in the supply of steel and oil have led to a deficit in the marketplace, at a time when the demand is significantly high. Combined with extreme weather conditions across Europe, bringing road and traffic to a standstill including inland waterways transport due to adverse flooding, many packaging manufacturers are bidding and fighting for raw materials.
It is also reported that raw material suppliers are favouring buyers outside of the UK, citing issues with post-Brexit paperwork and customs.
European steel mills and oil producers have reduced their deliveries due to the logistical issues mentioned above and the ongoing challenges of Covid-19. With a number of the large producers announcing force majeures and similar situations reported across the globe, the supply of important primary materials such as steel and plastics has become even more critical.
With steel and polymer manufacturers being the key culprits, it is so ironic that steel drums and oil go hand in hand, anyone would think they are working together to push up prices!
However, my understanding is the polymer manufacturing is fully reliant on the by-products made via the oil refinement process. Of course, over the last 12 months the demand for vehicle fuel has dropped significantly, presumably leading to a drop in oil refinement, which in turn means there are fewer by-products to make the polymer, resulting in raw material shortages.
What do you think?
This, I guess gives justification to the polymer shortages, but what about steel? Have the steel mills been impacted by Covid-19 and the weather conditions to such a degree that they can justify restricted supplies?
The cynic in me would question whether the force majeures are a planned strategy to help push up prices! What do my fellow industry colleagues think? I’d love to hear your thoughts or any insights on the subject.
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