Ron Marsh, Chairman of the Polymers for Europe Alliance
Following the materials shortages that seriously affected Europe’s polymer industry in 2015, the alliance that was established to monitor the situation has issued a warning that EU tariff suspension/quota laws are failing EU plastics converters.
According to the Polymers for Europe Alliance, a lack of unanimity amongst member states and polymer producers has resulted in the industry approaching summer 2016 facing material shortages once again.
“There has not so far in 2016 been the same plethora of Forces Majeures that there was last year, but nonetheless the market watches with considerable anxiety as polyethylene and polypropylene become shorter and shorter. 2016 could well prove to be a defining year for the plastics industry in Europe,” said the Alliance in a statement.
Since early March 2015, the ageing EU polymer industry has declared new Forces Majeures on 66 occasions. This has exacerbated an already tense situation for the EU polyethylene and polypropylene markets and has driven polymer prices to levels not seen in the past decade.
From March 2015 to May 2015, EU polymer prices increased by over 40 percent whilst oil prices remained at a record low. As a consequence of this situation, EU plastics converters submitted 45 requests for tariff suspensions and quotas in seven Member States in 2015.
The Polymers for Europe Alliance says it brought this situation to the attention of the European Commission and the Economic Tariff Questions Group (ETQG), ahead of the July 2016 round of tariff suspension and quota requests.
The Alliance says it emphasised the importance of these tariff suspension and quota requests for the future competiveness of the EU plastics converting industry, to ensure volumes of polymers are sufficiently available to continue business.
It added that, as a result of the situation in 2015, it “thought that the whole supply chain understood the severe threat to the industry”, and therefore anticipated that proposals to restore the level of duty to 3 percent from the 6.5 percent level introduced at the beginning of 2014 would be “warmly received by all parties.“
However, it says it was “surprised and disappointed” to learn that all such proposals were being “vigorously resisted” by certain polymer producers.
In addition, unanimity amongst all Member States concerning a request for the tariffs on a quota of material to be suspended or removed was not achieved, with the UK, Italy, Spain and Portugal opposing to the final request for the 3.5 percent reduction in the level of duty.
Given that polymer producers themselves have the right to seek access to this material should the reducttions in duty be granted, the Alliance says they are, therefore, “depriving converters of the opportunity to directly ease their supply problems”.
Given the objections made by certain polymer producers to the tariff requests, and the uncertainty of EU rules applicable to these requests, the Polymers for Europe Alliance is now calling for a review of these rules via amendments to the applicable law.
This, it says is “the only way to fix a system which is unfair and does not protect the competiveness of the EU plastics converting industry, a sector employing 1.6 million people and generating an annual turnover of €380 billion.”