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EU coronavirus lockdowns disrupting plastics converter logistics, output: sources

March 26/2020

MOSCOW (MRC) -- The coronavirus-related lockdowns imposed across Europe are beginning to disrupt chemical logistical systems, impacting plastics converters' planning and operational capabilities, reported S&P Global with reference toresin buyers' statement.

Although it is normally the monthly contractual resin price development that is usually their main concern, the buyers said their focus this week has switched to more basic operational questions.

A number of countries - including France, Spain, Germany and Austria - unilaterally imposed full or partial border closures this week and a continent-wide shutdown was confirmed by the EU on Wednesday.

The effect of this has been to strain supply chains and logistical systems with it potentially affecting production and the delivery of resins and finished plastics.

"We are still taking deliveries but production (supply chain) is closing down bit by bit due to people that are absent, [and] that we cannot guarantee production. Day by day we assess. We are still up and running and we have lines closing due to a lack of people. If we close lines, we have no consumption, so we have (to be ready)," a plastics converter said Wednesday.

The impact of the coronavirus outbreak and the measures taken to limit its spread have meant that the situation in Europe is a fast changing one. On Tuesday, and prior to the border closures, converters indicated they were struggling to secure trucks to enable deliveries, in particular to food suppliers.

"We are struggling to get the logistics to get the trucks. It's no longer a question of price. In the France situation, every day there's new restriction. Our business is not impacted, but we are already in the food industry for a long time. We are confident to continue for a few days. We are going to the Italian model - a very restricted mode," another plastics converter said Tuesday.

"I make film for the food and pharma industries. But if I have one guy sick it may impact my system and my extrusion, so this is a daily check. How can I supply ... goods to the customers [with these potential issues] or [with] restrictions to supplying resins ... it seems quiet complicated to find trucks," the converter added.

"Sometimes it's not a time to be difficult. Today we need food, packaging for food, and it's not time to make money. Today we cannot think about making money and it's a huge cost. The company that makes benefit this year, we hope that they don't suffer. We are lucky. Let's be human," the same converter said.

Meanwhile, long-haul trucking remains a tricky endeavor due to the greater risk of supply interruptions. "What I hear today for Long haul in Eastern Europe, having drivers going across border without being quarantined. It's a day by day. It pushes up costs," a linear low density polyethylene producer said.

"So far it's not that bad for my business. Flex packaging is more, ... (there is) more of an increase in demand as there ... is more demand from supermarkets. I'm still receiving orders," the same LLDPE producer said.

However, the impact of any plant closure could be costly. "The only thing that I am looking at is how to keep my supply chain going. Closing the asset costs money. The flexible (packaging) business is still good. Good demand and I can get good orders then I will continue," the producer added.

Similarly, logistical issues have come to the forefront of both the virgin polyethylene terephthalate and the recycled PET markets this week, as borders close and travel becomes increasingly restricted.

"Now it is a disaster, huge queues, late arrivals," one producer said.

As the situation continues to change, market participants are monitoring transportation costs on a daily basis.

"We have not yet encountered logistics costs going up. We aren't yet in a situation where we see issues with deliveries, but this develops day by day," one recycler said. The human element of logistics is also a concern for market participants as they prepare for potentially large numbers of employees being absent due to illness and a reduction in the number of available drivers.

As per MRC's ScanPlast report, the estimated consumption of polyethylene terephthalate (PET) in Russia increased in January 2020 by 9% year on year. Totally, Russia recycled 55,390 tonnes of PET chips in January (excluding shipments of Russian material to the countries of the Customs Union). PET chips production in Russian in January 2020 totalled 43,200 tonnes.


mrcplast.com
Author:Margaret Volkova
Tags:Europe, PE, LLDPE, PET-granulate, petrochemistry, packaging, Russia.
Category:General News
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