Monthly Update for our Temporary Surcharge
Summary of the latest position following the implementation of a PVC material surcharge in May 2021.
Please click the link below which shows details of the global supply of building materials across all sectors, but in summary; As expected PVC prices have continued to rise as per the graph below as availability is becoming more and more scarce. As previously mentioned we have significant purchasing power with long standing supplier relationships in place, these are protecting our supply chain, although clearly this comes as a cost. We have taken the decision that our customers would prefer ongoing supply even if sourcing raw materials is coming at an increased cost, some plastic materials have now doubled in price. We do not take these decisions lightly but we have maintained supply. We know many other suppliers have long lead times or limited supply.
Due to the further increase in raw materials, we have no alternative but to increase the surcharge from 4% to 7.5% for all deliveries from 1st June 2021.
This increase only covers the increased cost of raw materials and does not increase our profit, we are not looking to take advantage of the situation. We sincerely hope that the prices hit the ceiling in June and hopefully start to fall in the late summer. As soon as material prices start to fall, we will reduce the surcharge accordingly.
Existing customers are currently on allocation reflecting previous trading history and we are not taking on new customers at the moment, as you can imagine we are getting lots of new enquiries.
Thank you for your ongoing support and understanding. If you have any questions in the meantime, please don’t hesitate to speak to your usual sales contact.
Derren Gittins & Sarah Webb
Detailed Position of Global Supply Constraints May 2021
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May's Communication Below
You may be aware from various industry communications that there is a need to introduce a temporary material surcharge.
Verplas has been directly affected by the same unprecedented inflation pressures as they’re impacting on the raw materials within the industry’s entire supply chain.
Unprecedented demand on a global basis and considerable constraints in capacity have meant we are seeing ongoing price pressure for the supply of PVC. Since October 2020 prices are up 36% and since the beginning of the year 26%.
Below are a couple of graphs illustrating the increases that we have been subjected to over the past 6 months along with a forecast price inflation to June.
The availability and cost of PVC over the last several months has been particularly problematic due to global demand being greater than capacity. In this current climate of global under capacity the manufacturers are not importing large volumes into the UK as they are instead supplying their own local high demand markets where they are able to achieve approximately $350 more per tonne. This has resulted in the UK supply being restricted and the UK customers are having to pay premium prices to secure supply on a ‘’take it or leave it’’ basis.
Due to our significant purchasing volumes and long-standing supplier relationships have been able to secure the necessary volumes to meet our customers demand where many of our competitors have not been so fortunate.
Whilst we believe this is a temporary rise caused by a perfect storm in the market, we do not believe it will be resolved until July or August. To ensure availability of product we have to pay market price and cannot afford to absorb these costs. During this time of high-cost inflation and volatility until the market stabilises, we are going to apply a surcharge on all invoices reflecting the current market conditions of all raw materials.
Plastic is priced into us on a monthly basis and this surcharge will vary month to month according to the input price. Details will be published on our website during the last week of each month, for application in the following month.
The whole of the window and plastics industry have implemented the surcharge. We have no choice to follow and are only passing on some of the absorbed costs. We want to make sure we can keep supply ongoing and are not taking a profit from this surcharge.
Without the surcharge we have no means to buy raw materials and remain a viable supplier. All suppliers in our sector will have to follow or they will not be able to maintain supply. We are buying at inflated prices now to ensure we have ongoing material to ensure we can fulfil customer orders.
The surcharge for May will be 4% and will commence from the 1st May 2021.
It is anticipated that the prices for PVC will fall heading towards the end of the summer which will allow us to eradicate the surcharge, however we are currently living in very changeable times.
Verplas recognise how difficult this will be for you and can assure you that we are doing everything we can to alleviate these rises.
We thank you for your continued support.
Derren Gittins & Sarah Webb
Managing Director & Sales Manager