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Surcharge Update

  • Surcharge Update - Deeplas

Surcharge Update

Updated 25.10.21

Implementation of a further surcharge of 5% on Building Plastics from the 1st November - total surcharge 25%

Dear All,

There is no easing around the constraint of supply with resin and to quote the feedback from the PVC analysts, ‘continued strong demand, global price firming and rising utility costs all mean that the resin houses will continue to push for further price increases’.

As we have pointed out previously, there is unlikely to be any relief from this pricing until the Americans resume supply into Europe, thereby putting supply and demand in balance which will likely cause a reduction in prices.

At this time a number of European producers have further increased prices substantially with an energy surcharge, but this has not yet fed through to our supply.

Whilst supply of resin to make Profiles is expensive, for the most part it is available, Unfortunately, this is not the case with the foam resin used to manufacture Building Plastics. Whilst we have been shorted through the last month a number of our competitors have found themselves without supply. We have worked hard to source alternative product but have only been able to do so at hugely inflated prices hence there is a differentiation in the surcharge necessary for Building Plastics. We believe that it is vital that we maintain supply, even where the cost to do so is markedly different.

We would be pleased to give you some certainty over pricing as we move into the new year, but the outlook is not good and even the most optimistic forecasters are not expecting any relief until April/May.

There has been a structural change in resin market pricing. To reflect this, we will be looking to restructure our prices for 2022 and will advise the changes in early December for implementation from the start of February. The idea is that we will absorb some of the surcharges into price whilst also reflecting increasing energy and labour costs. We will still keep a large proportion of surcharge as we are expecting pricing reductions in 2022 and we want to reverse these into you as quickly as possible without the need for you changing all of your price files.

Yours faithfully,

Mark Kelly
 
Chief Executive Officer
 
Deeplas