‘We must ensure 'force majeure' tensions are not repeated’

By Jenny Eagle contact

- Last updated on GMT

Javier Constante (left) and Roland Roth (right) meet at Dow in Horgen.
Javier Constante (left) and Roland Roth (right) meet at Dow in Horgen.

Related tags: Polymer, Packaging and labeling, Packaging

The plastic packaging industry must close ranks to avoid the ‘force majeure’ tensions in 2015 says Roland Roth, president, German Plastics Packaging Association (IK Industrievereinigung Kunststoffverpackungen).

A high number of force majeure notifications in Germany and Europe last year led to significant pressure on the producers of plastics packaging and raw material shortages correlated with price increases.

Stronger public platform

The crisis underlined the need for a good cooperation between raw material producers and processors.

"Producers and processors have gone separate ways for a long time​,” said Roth.

"We need a commitment on the reliability of our production supplying, capacities in Europe and the will to continue supporting innovation in Europe​."

The IK president met with Javier Constante, commercial VP, Dow Packaging & Specialty Plastics EMEA, in Switzerland recently where they agreed the future of the plastic industry can only be shaped successfully through mutual efforts.

They also agreed on cooperation between raw material producers and processors in respect of the often unfairly negative image of the industry perceived by the public.

"We believe the European packaging industry will continue to grow​,” said Constante.

Europe is not only a market, but first and foremost an innovation production location. We view the future positively and plan to maintain capacities and offer new products on the market​.

"At the moment we see a discrepancy between emotional reactions to plastic pollution and the facts, which often prove exactly the opposite and show plastic's great usefulness​.”

The two parties are now calling on other associations to show their support to create a stronger public platform in the future.

Some 40 ‘forces majeures’ from March to June

Last July, ​Elipso (France), IK (Germany), BPF and PAFA (UK) urgently called for polymer producers to accelerate restoration​ of normal supply conditions to plastics and flexible packaging manufacturers.

For four months prior to that, polymer producers declared some 40 ‘forces majeures’ from March to June due to technical problems, electrical issues, maintenance problems and a lack of supply of ethylene, (a monomer used to produce polymers).

The organisations claimed the crisis has brought about shortages that have seen prices spiral for example PE rose 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 were in 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.

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.

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