Business and Law

Commodity markets “to the moon”!

“To the moon”: this slogan is on everyone’s mouth these days! Elon Musk tweets about Bitcoin, China buys every kilo of copper on world markets even though the price has been up more than 100% since the Corona lows, crude oil is on a steady upward trend, food prices are rushing from high to high, other metals are climbing new highs almost weekly, etc…

5 – years development of oil price BRENT

Are these signs of galloping inflation?

If you look at our segment of polymers, you could assume it. Here, too, price increases amount to 100% or more since the lows in 2020. In the first quarter of 2021 in particular, price increases were exponential. Standard thermoplastics such as polyethylene, polypropylene, polystyrene or PVC and their precursors have risen between Euro 300 and Euro 600 per tonne.

This extreme development is due to several factors. We are faced with the following limitations in Europe:

  • 13 Force Majeure reports from various producers
  • 11 system faults
  • 22 throttling in productions
  • 24 maintenance style stands

Deja Vu 2015?

According to Plastics Information (KI), processing companies are faced with availability in individual cases of only 50%. These bottlenecks are, of course, associated with huge price increases, which even surpass 2015. We at Plastrans can only confirm this. In some cases, it is even only a question of not forcing downtime in the processing plants.

The industry associations in the plastics processing industry are therefore sounding the alarm and fear that this scenario will continue well into the second half of 2021.

Our customers report that at the moment it is primarily about prices and availability, but a completely different dilemma awaits: the timely transfer of price increases to their customers! This will be the biggest challenge in the coming months and, in some cases, unworkable.

The situation remains tense and we can prepare for challenging times!

Most cordially your

Mario Loidl
Managing Director