Ladies and gentlemen,
For some time we have noticed that the market of raw materials, including plastics, has a clear tendency to increase prices. The production capacity for PE and PP granules is limited for various reasons that are reported by suppliers and manufacturers on an ongoing basis.
Among the most frequently mentioned are production problems, such as unexpected failures or technological difficulties. We have noticed production downtime in petrochemical plants in the USA due to extreme winter. The supply of gasoline and ethylene was also limited due to lower crude oil production last year.
Another key reason is the logistic disruptions related to the COVID-19 pandemic, which translate into the suspension of deep-sea transport and an increase in prices for container freight on the Europe-Asia route. Imports to the EU were also limited due to the arbitration of exporters in the USA and Russia.
The constraints on the availability of raw materials, coupled with the continued high demand for these materials, are also of great importance.
Our Customer Service Department monitors both the prices of raw materials and the main indicators related to them on an ongoing basis. According to the ICIS portal, the price of LDPE raw material has increased over 4 months from:
48 week 2020 — EUR 1320/t LDPE
11 weeks 2021 — EUR 2000/t LDPE
This gives an increase of 51%.
For similar reasons, we can also observe an increase in prices on the paper market, mainly due to the significant demand for this product. From the information we receive, it amounts to 5-10%. Additionally, there is a deficit in the availability of selected types of paper, including for the production of cardboard.
The future is uncertain. Analysts’ forecasts for both further price increases and shortages of raw materials will persist in Q2 and Q3.
Therefore, in order for the production process to proceed without unnecessary delays, we ask you to plan orders in advance. For our part, we will do everything to meet your needs and meet the designated delivery times.
We will keep you informed about any changes.