Surcharge Update 30th September 2021
Dear All,
Implementation of a further 4% surcharge for EBP & Deeplas on PVC from the 1st October – total surcharge 20%
Unfortunately, we are not seeing any let up in the pricing pressure around PVC. We hoped that relief would come from the USA starting to export back into Europe, and whilst this looked very likely it was scuppered by Hurricane Ida going through the Gulf of Mexico and taking out a number of Ethylene plants (Ethylene makes up 50% of the raw material needed to make PVC). So, supply in Europe remains very tight.
As you will all be aware a number of a factors are driving up the price of oil and gas, with oil increasing by a third in the last week and the gas markets in absolute turmoil with up to a tripling of price. Ethylene can be derived from either oil or gas but as both are advancing in price, we would expect this to feed in to resin prices over the coming months.
We will do everything we can to mitigate these rises but options are very limited and as we are also seeing huge price pressure on other commodities. Part of the purpose of this note is to make you aware of the market conditions so that you can take this into full consideration when pricing for new work.
Eventually we expect the market to fall back from these highs but probably not until the second quarter of 2022 and even then we are not anticipating dramatic falls and wouldn’t be at all surprised if prices still continued to advance well into the second half of the year, although at a slower rate. We live in unprecedented times, but customer demand remains robust and we are not seeing any obvious signs of a lack of confidence in the market so we are expecting sales to hold up despite the necessity of rising prices.
Yours faithfully,
Implementation of a further 4% surcharge for EBP & Deeplas on PVC from the 1st October – total surcharge 20%
Unfortunately, we are not seeing any let up in the pricing pressure around PVC. We hoped that relief would come from the USA starting to export back into Europe, and whilst this looked very likely it was scuppered by Hurricane Ida going through the Gulf of Mexico and taking out a number of Ethylene plants (Ethylene makes up 50% of the raw material needed to make PVC). So, supply in Europe remains very tight.
As you will all be aware a number of a factors are driving up the price of oil and gas, with oil increasing by a third in the last week and the gas markets in absolute turmoil with up to a tripling of price. Ethylene can be derived from either oil or gas but as both are advancing in price, we would expect this to feed in to resin prices over the coming months.
We will do everything we can to mitigate these rises but options are very limited and as we are also seeing huge price pressure on other commodities. Part of the purpose of this note is to make you aware of the market conditions so that you can take this into full consideration when pricing for new work.
Eventually we expect the market to fall back from these highs but probably not until the second quarter of 2022 and even then we are not anticipating dramatic falls and wouldn’t be at all surprised if prices still continued to advance well into the second half of the year, although at a slower rate. We live in unprecedented times, but customer demand remains robust and we are not seeing any obvious signs of a lack of confidence in the market so we are expecting sales to hold up despite the necessity of rising prices.
Yours faithfully,