October 14, 2021

Polymer producers are looking to implement surcharges to compensate for the recent spike in energy costs, adding another layer of complexity for the industry.

Many players are already battling with severe shortages, plant disruptions, and high transport costs.

With shortages of raw materials slowing demand in some key segments, margins could soon come under pressure across the polymer industry.

In October, the rising energy costs is adding further pressure on an already stressed polymer sector.

Producers of polymers and engineering resins have been communicating to their customers about their intentions to implement surcharges. In some cases in excess of €300/mt.

Some have noted that the increases in gas and oil prices has added a significant cost pressure.

As many polymer markets are tight, producers are reluctant to accept a reduction in margins. Therefore many are looking to pass the extra costs to their customers.

The surcharges have been heard in most markets, such as polypropylene (PP) and polycarbonate (PC). And also polymethyl methacrylate (PMMA) and acrylonitrile butadiene styrene (ABS).

There will be resistance from buyers. Many continue to struggle with low availability, high prices, and low demand due to a lack of raw materials impacting production downstream.

However, it is inevitable that many will have to absorb some increases in the coming months because availability is tight. And the rising costs of energy is placing tremendous pressure on suppliers.

And with low demand developing in some downstream industries, the polymer industry could be in the grip of a period of margin contractions along value chains.