UK polymer buyers looking at options for post-Brexit market

Linda Naylor

15-Nov-2018

LONDON (ICIS)–Polyethylene (PE) and polypropylene (PP) buyers are beginning to talk to their suppliers about the best way to prepare for a post-Brexit scenario, and many are considering buying more volume.

Photo by Nils Jorgensen/REX/Shutterstock. UK Prime Minister Theresa May makes statement after Cabinet agrees draft Brexit deal

– Buyers ready to commit to more stock

– Situation uncertain

– More imports to come from outside EU

Some buyers have already been building stock, particularly in the PP sector, which is in better balance than PE.

“One of our customers was asking our advice on what to do,” said a distributor, “and there is concern for quarter one.”

“It is being considered,” said a buyer. “…the thought is we probably will put stocks in sometime during quarter one. We’ve talked to all suppliers to see what plans they’ve got in place. Basically if you want extra you need to forecast it.”

“We are planning on increasing inventory but are trying to work with our suppliers so they share the risk with us,” said another buyer. “We are also looking at moving spot buying from outside the EU… we are trying to spread the risk.”

Buying PE from outside the EU is becoming easier as new plants come on stream in the USA, and other regions, while in PP product is not so freely available. Imports into the EU in recent months have been too high to work.

Progress on Brexit remained hotly debated and uncertain.

UK-based Premier Foods said in its half-yearly statement earlier this week that the group shortly intended to start a process of building stocks of raw materials to protect the company against the risk of delays at ports.

Not all players were convinced that ports would be as much of a problem as has been portrayed in the run-up to Brexit.

“Of course were taking it seriously, but we’re not panicking,” said another PE buyer.

“Technology has made such progress,” it said. “We’re not going back to 50 or 60 years ago…now everybody clears…as it [the lorry] approaches anyway. All shipments that we export or import have documents and they’re already cleared before they hit the docks.”

Another of the buyers saw buying from outside the EU an advantage also in this respect.

“We will have the options of using other ports,” it said.

With the resignation of several government ministers and a further impending storm over the current Brexit plan, no early solution was expected on Brexit and its implications for UK polymer buyers.

PE and PP are used in packaging and the manufacture of household goods. PE is also used in agriculture, and PP in the automotive industry.

Focus article by Linda Naylor

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