European plastics industry promises greater unity as Ukraine crisis compounds “Annus Horribilis”

14 Mar 2022 --- European polymer suppliers and converters have expressed a clear interest in working together more transparently in recognition of the supply chain’s recent vulnerability to force majeures. The Polymers for Europe Alliance (PEA) held a webinar in early March with over 600 businesses to discuss how to strengthen the industry after “unprecedented” COVID-19 disruptions, surging energy prices and the unfolding Ukraine conflict.

We speak to PEA’s chairman Ron Marsh, the webinar’s moderator, to understand how the industry can learn from recent force majeures and identify areas for constructive cooperation to build a more stable future.

“[The webinar’s] key takeaways included a clear interest in working together more transparently in the future, with a recognition that the two sectors [polymer suppliers and converters] will ultimately thrive or fail together,” says Marsh.

“It was widely understood that the European industry is particularly prone to disruption by forces majeures as a result of the age of much of the capacity. Nonetheless, the argument was made that, in some corners of the supply industry, investment in new capacity still takes place from time to time.”

“Also, [it was understood] that Europe aims to lead in investment in new recycling technology, which in a circular world should allow Europe to make up some of the ground it has lost.”

An Annus Horribilis
PEA reports that many participants were surprised by the strong consensus that emerged from the webinar. Recent difficulties were acknowledged, and 2021 was even described as the “Annus Horribilis” for the plastics industry.

PEA’s webinar brought together over 600 European plastics supply chain players.The suggestion was made that the recent annual assessment exercise illustrated a high degree of exasperation by converters in applauding the performance of new entrants to the European industry while relegating the traditional major suppliers to a much more modest position.

Participants agreed that Europe required investment, but some polymer suppliers could point to projects that were already underway. Others felt that investment in the circular economy would allow Europe to recover its “historic lead,” while others could point to a clean slate on forces majeures, suggesting their requirement for investment was less pressing.

“There was also at least one voice on the supply side that could argue they had managed to avoid force majeures, so their track-record was exemplary in this respect,” adds Marsh.

Ukraine war darkens new chapter
Polymer suppliers and converters agreed that avoiding an ongoing decline in the relative standing of the European plastics industry would require a new chapter in the industry centered around “more transparency, clear collaboration and mutual respect” for the differing requirements of suppliers and converters.The European plastics industry faces fresh uncertainty as the Ukraine war escalates.

“The will to achieve this was present during the meeting, but it would require buy-in from a broader grouping to capitalize on this opportunity,” Marsh tells PackagingInsights.

“The meeting concluded on this positive note while recognizing that the Ukraine crisis had brought new factors into play, the consequences of which were as yet difficult to predict.”

Marsh indicates nobody in the webinar could confidently predict the impacts of the Ukraine war on the plastics industry, as “almost every conceivable outcome remains possible.”

Last week, oil prices skyrocketed as Western powers imposed bans on Russian crude imports. The packaging industry braced for “catastrophic” economic blows, as Russia threatened to block oil and gas exports to Europe entirely.

“It seems clear that further discussion is necessary to build on the tentative steps forward made in this webinar, and that the current extraordinary events in the East of Europe will influence the direction of those steps,” concludes Marsh.

By Joshua Poole

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