The price of raw materials and energy has risen sharply since January 2022, affecting businesses and the market in general.
According to ARERA, the Regulatory Authority for Energy, Networks and the Environment, in the first quarter of 2022 the price of natural gas increased by approximately 94% compared to the same period in 2021 and electricity by 131%.
The problem is especially serious for very energy-intensive industries such as that of ceramics, glass but also rubber and plastic.
The question is will things get better? And if so, by when?
An initial response came from Unionplast, the association of plastics converters belonging to the Plastic Rubber Federation: if a slight decrease in the consumption of virgin plastics is expected – caused by the slowdown in industrial activities and consumption itself, as well as by the reduced availability of raw materials – an increase in the consumption of recycled plastics is on the way. This is thanks to the pull of the Plastics tax which will come into force in Italy next year, but also to the increased demand for recycled materials.
What about PVC?
The Italian PVC market, due to a very high demand and an equally high scarcity of material, has already registered an uninterrupted increase in prices since 2020.
In all likelihood for PVC, after the rapid surge in recent months (we are talking about over 2000 euros per ton) there will be a slow decline starting from June until reaching 1800 euros per ton at the beginning of 2023.
The reason is also logistical: post Covid19 procurement difficulties still leave their mark on the supply chain and, consequently, on costs.
Returning to the energy problem, energy costs of up to 250 euros per MWh are expected in 2022, which should then fall to around 150 euros per MWh in 2023. A small consolation, given that previously energy costs stood at around 60 euros per Mwh.
What to do then?
There are two lines to follow while waiting for the geopolitical situation to stabilize:
- Energy side – Investing more and more in renewable energy resources, while at the same time seeking maximum efficiency in plant management to avoid waste
- Raw materials side – Introducing ever higher percentages of PVC and recycled polymers
Two actions that at ADFlex we have been carrying out since before the current energy crisis and the supply of raw materials.