Raw materials shortage sends price shocks down the supply chain
Force Majeure is a standard clause in supply contracts that exempts companies from fulfilling contractual obligations because of external forces such as an act of God or parliament. But the EFIBCA statement claims the cases registered by raw material suppliers “lack detailed information and leave many open questions”.
Raw materials can often account for 60 percent to 70 percent of costs for small and medium sized businesses and the impact of the price increase is “potentially existence threatening” for many of the companies. EFIBCA claims that “plastics converters will be left little choice but to pass these costs down the customer chain.”