Supply problems and price pressure are currently arising in the global rubber and plastic market. This also has an effect on the packaging tape market (PVC tape and PP tape). The pressure comes from a combination of two key factors: a rising shortage of raw materials and an explosive increase in demand.
Rising raw material shortages
The problems started in early 2020 due to a fire in a large PVC film factory. This was not immediately noticeable because the market was still saturated with buffers. These problems will be solved in due course by rebuilding this factory. However, that will not be until the second half of 2021 at the earliest.
Now that the economy is starting to pick up, there are hardly any inventories. As a result, it takes a long time before factories can run at top capacity again. The result is scarcity and higher prices. In addition, the logistics are completely disrupted. Many of the basic chemical materials have to be brought to Europe in bulk containers from Asia. But those containers are not there. The price for transporting containers from Asia has exploded. The effects of the traffic jam on the Suez Canal make that even worse. As elsewhere in Europe, Dutch entrepreneurs in the rubber and plastics industry are reporting many force majeure declarations from raw material suppliers. Promised deliveries are cancelled.
Explosive increase in demand
At the same time, there is an explosively increasing demand for packaging tape, among other things. Due to the corona pandemic, many shops have started to transform themselves into webshops. And because of corona, there is much more online shopping anyway. And all these purchases are packaged and sealed with tape! The demand for packaging material and (printed) tape started to grow explosively, which meant that buffers started to run out.
Price increases for packaging tape are inevitable. It is no longer possible to lock in rates for a longer period of time. Causes of these price increases include;
Scarcity of raw materials, increasing shortages: supply and demand are not in balance and that affects the price
Rising transport costs: deliveries of raw materials from other parts of the world are becoming increasingly difficult due to declining freight capacity
Increasing taxes: new and increasing CO2 surcharges and waste processing contributions in the production chain
Also good news
The Laro Tape team does everything it can to keep the various raw materials taken care of and to keep 'the operation' running. The good news is that our two new, additional printing machines have been in operation since the beginning of this year, which means that our total machine park consists of 18 machines. We are also pleased with the good relationship we have with our partners in the chain, our suppliers. We are in continuous dialogue with them and grateful that we have not had a production stoppage due to lack of material.
Help my tape is out! What now?
We fully understand that our delivery reliability is of great importance to you! We therefore advise you to take this situation seriously into account and if possible do the following:
- Order well in advance
- Increase your stock buffers
- Keep an eye on your production and delivery schedules
Naturally, we closely follow price and delivery movements on the various (world) markets and react immediately as soon as the situation relaxes somewhat. Of course we are also happy to be there for you in these very turbulent times!