National Flexible - Twigg´s Times
With a wealth of experience in the packaging industry at the most senior levels, Barry Twigg - National Flexible´s major shareholder and CEO – shares his thoughts and ideas about the latest trends.
Polymer Prices – Continue to Defy Gravity + Plastic Recycling Paranoia
First of all, many thanks to those of you who gave your comments on LinkedIn on our latest Twigg Times post, they were very welcome.
Currently I am away on my Autumn sojourn into the Algarve, a place where there are no daily deliveries of milk, newspaper, post or weekly collections of domestic refuse.
Here we all take our rubbish to central collection points, where we conscientiously sort it into the various constituent parts for recycling. After which it is picked up from the various collection points and then for the most part all dumped back as a job lot into landfill, amazing!
The ‘system’ really got me thinking about the realities of waste recycling, particularly plastic waste, but more on that later
Polymer Prices, Profits and Plastic Bags
Where to start? The above histogram highlights that Polymer prices are still defying gravity and remain just 1% below their record highs of June. This is despite the fact that oil prices have fallen some 20% since May and are down circa 60% year on year. During the same period, Polymer prices have risen 5%.
News Flash – Polymer Profits – Nice Work if You can Get it!
We have long contended that polymer supply is a “Rigged Market” where the large petro-chemical companies control supply to maintain prices. The latest evidence we have to support this contention are the financial results for Basell the market leader and Dow Chemicals, a top 3 supplier.
Polymer Availability – Film Prices, M & A Activity And Plastic Bags
As recently as April it was suggested by Basell, the petro-chemical giant, that film Polymer may have to be put on allocation due to production problems.
At that time we said, “We don’t think this will happen! Inevitably, film prices will increase but with oil at just 54 dollars per barrel we believe the current margins for polymer suppliers are just too good to miss. They will simply re-introduce some of the closed production capacity as the polymer price increases currently being implemented are made to stick”
Polymer Prices & More: The Fat Lady is Not Singing
There is considerable ambiguity in the stories circulating regarding the availability of polymer supplies to film manufacturers. Whilst some tell us that the situation is gradually returning to normal, others have suggested this is basically due to imports from the Middle and Far East at prices higher than normal. What is certain is that there has been limited information available on the reintroduction of the polymer production plants closed claiming ‘Force Majeure.’
Polymer Prices: Record Highs in June
Resin prices for both OPP and PE polymers have reached record highs in June. Although the increases applied have been only 40-60 Euro cents, these increases follow those applied in March, April and May. The resultant prices are the highest yet reached for OPP, HDPE and LDPE polymer.
The Polymer Saga continues + New OPP Plants
The current turmoil in the film polymer supply market was exacerbated last week as Ineos declared ‘Force Majeure’ at its Lavera plant due to the inability of Total to supply feedstock for both PP and HDPE manufacture. This reduces the short term availability of polymer in Europe by a further 740,000 tonnes. Despite the re-opening in mid-May of capacity from 3 European plants previously closed, this setback could prolong the period of higher prices and longer lead times for film into the 3rd quarter of 2015.
Breaking News – Film Polymer Availability
Only those Packaging Film end users away on a world cruise, or in some other somnolent state, will be unaware that the flow of homopolymer for film manufacture has been dramatically curtailed over the last 3 months and as a consequence the cost of purchasing all packaging films has increased dramatically.
The reason being that in all, since early February, there have been 14 polymer production plant closures involving 7 companies. All these producers have claimed “Force Majeure” as the reason for closure. The 4 bulk producers Basell, Sabic, Ineos and Total have had the biggest reductions in capacity. The consequence has been a total production closure of some 20% across Europe and the Middle East.
Breaking News – Polymer Shortage
The Story so Far
• 11 polymer production plants across Europe and the Middle East are closed either wholly or in part
• 20% of all European polymer capacity is closed
• US dollar exchange rate moved against Sterling and the Euro
• Supply of all polymer is affected – PP and PE have been particularly hard hit • ‘Force Majeure’ is the reason given for most of these ‘outages’ and flexible packaging trade associations across Europe are demanding more information about production problems • Prices of all polymers are being increased month by month with allocation (rationing) being suggested by some polymer suppliers