Lack of raw materials threatening Portuguese industry

By TPN/Lusa, in Business · 16-07-2021 01:00:00 · 0 Comments

The scarcity and high cost of raw materials and maritime transport is proving to be a serious problem for industrial activity across the board leading to delays in orders and lay-offs in some cases.

According to the conclusions of the June monthly survey of the Portuguese Business Association (AEP), carried out with 300 associates to “evaluate the main obstacles to the recovery of business activity”. The unavailability of raw materials and intermediate products and the difficulties in commercial circuits, due to the lack of containers, are the “new problems” pointed out by Portuguese companies, together with the “new reality” in the organisation of work in the post-pandemic period.

“At this moment, the issue of the brutal increase in the cost of raw materials and transport is starting to be terrible”, confirmed to the Lusa News Agency the vice-president of the Association of Metallurgical, Metalworking and Related Industries of Portugal (AIMMAP), pointing out increases, “in some cases four times”, in maritime transport and increases of “50 percent, 100 percent or even more” in the price of raw materials.

According to Rafael Campos Pereira, these two factors “are associated, because a large part of the raw materials [in the sector] come from outside the European Union”, by sea, and “there are no containers and the price of those there are very high”.

This situation impacts “both in the purchase of raw materials, as well as in the purchase of components and exports”, he explains.

“This has to do with the fact that China and the East, namely Korea, first resumed their activity, before Europe, in 2020 [in the resumption after the first wave of the pandemic], which led all containers to be moved to the Pacific routes”, explained the association leader.

Another reason put forward by AIMMAP is that, with these prices, raw materials have become a “very attractive investment, particularly in the futures market, institutional investors are buying raw materials as commodities, so our manufacturers are now also forced to compete not only with manufacturers from other countries, but with investors”, he says.

Also pointing out “huge problems” to the activity of the Portuguese textile and clothing industry, the director of the Portuguese Textile and Clothing Association (ATP), Jorge Pereira, speaks of a “complete lack of control” of the logistic chains and of “super inflated” values of the transport.

“Right now, the cost per kilo, for example, of a container of yarn is never less than 65 cents, when it should cost 15 to 20 cents a kilo, and containers that took 30 to 40 days, at most, to reach Portugal, sometimes only arrive after two months and more, because they are stuck in other ports for lack of connections”, he said.

Already the Portuguese Association of Furniture and Related Industries (APIMA) reports, compared to July 2020, an increase of 600 percent in the cost of transport: “A container that cost 2,000 dollars a year ago now costs 12,000”, said the president, Joaquim Carneiro.

With regard to the main raw materials used in the furniture sector, APIMA points to year-on-year increases of 300 percent in the cost of metal, 40 to 50 percent in hardware, 20 percent in foam and 10 percent in cardboard.

“It is truly dramatic that companies are suffering this impact precisely as they are trying to recover from the very serious consequences of the pandemic. We urgently need regulation in a market that is in full speculation”, says Joaquim Carneiro, adding that the final prices may rise higher still as a consequence.



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