To say that the last 12 months have been very tricky to navigate would be a gross understatement. The combined impacts of COVID, the resulting lockdown, the migrant worker crisis, and the highly mercurial post-lockdown business climate have made each passing month a challenge to work through. And yet, most clients and vendors we have spoken with will agree that post-June 2020, things did somehow settle down on the business front. Demand picked up, companies slowly returned to a new kind of normalcy, and work started to get done.

Throughout history, India’s numbers have always been staggering. We swelled with pride as our population numbers were in no way reflected in the caseloads we saw post-September 2020. We beat our chests at the news that we were now supplying the rest of the world with vaccines.

The idea that within 6 short weeks, India went from a COVID success story to staring down the abyss of a potential apocalypse is stunning. The blame game aside – we all know the levers that helped nudge the numbers up so that there was enough critical mass to begin the avalanche of cases – the fact remains that as the developed world starts leaning towards a post-COVID environment, India is still mired in the depths of a crisis that does not seem to be letting up in any way. 

Most manufacturers have been terrified of a second lockdown. It was tough enough to make it through the first one, but companies somehow survived. A second shutdown would be devastating, possibly beyond recovery, mainly because this time, things are very different.

Last year, the world was united in its fight against COVID. Companies in every country came to a standstill and those of us lucky enough to have cooperative clients learnt that orders were not being cancelled – only pushed out by a month or so. Even those in industries where existing orders would not roll over and accumulate over the following months were relieved to know that India’s total lockdown was seen somewhat favourably by the rest of the world and demand resumed once doors reopened. At the same time, China was reeling under a lot of ill-sentiment thanks to COVID, so the tendency for export clients to shun Indian suppliers in favour of their Chinese counterparts was limited. Indeed, India’s problems with China in mid-2020 brought a lot of local demand back to local suppliers as the rush of patriotism temporarily eclipsed the lure of better margins.

It is not an exaggeration to say that none of these factors are very much at play anymore. For one, India-China relations, while still somewhat icy, are not strained enough to push Indian buyers away from China’s deliciously low prices. Even global sentiment towards China is somewhat muddled between still blaming them for COVID, holding them accountable for human rights abuses, and an inability to fully detach themselves economically. China continues to be the world’s factory and its supposedly excellent handling of the COVID crisis locally has allowed it to project a ‘back to business’ image while India still struggles with record-breaking caseloads each day.

Finally, the fact remains that the US and Europe – with a huge ramp-up in vaccinations – have started returning to normal and expect their businesses to function as such. It would not be feasible for a company to rest easy knowing that part of its supply chain depended on an Indian manufacturer. This year was supposed to be the time for everyone to get back on their feet and India’s inability to keep pace with the rest of the world has severely hurt both our image as well as the stability of our contracts with clients in other countries. Even the most generous of customers cannot be expected to indulge an Indian supplier marred by COVID cases and lockdowns when the client’s own business is being jeopardised by the resulting delivery delays.

It is possibly due to this reason that lockdowns, when imposed, have given leeway to manufacturers to stay open. However, manufacturers themselves need to juggle workload with the very real possibility that their employees remain at risk if the proper precautions are not taken. It is a very fine balance and Indian manufacturers need to tread it carefully for the next 3-4 months at least until the crisis is brought under some kind of control.

In this regard, there are certain things manufacturers can do to manage the situation:

1. Plan ahead: considering we are consistently exceeding our expectations of worst-case scenarios, this is not always easy. However, where possible we need to stock inventories of raw materials, so we are not exposed to supply-side shocks ourselves. With a disruption in everything from logistics to production schedules to worker movement, the risks remain high that just-in-time manufacturing will not work in the present climate

2. Prioritise: with resources scarce – especially around the workforce – we need to focus on clients and orders where timelines cannot be compromised. Indian clients may be more willing to understand delays, as many of them would similarly be dealing with demand and supply shocks. Export clients whose lines are depending on materials being delivered on time would need to take priority to ensure business relationships are not eroded.

3. Communicate: a client may have ordered 15 different parts but might suffer a potential line stoppage only for 3-4 parts. Open communication with the client would help their work to continue smoothly while allowing the manufacturer the leeway to push some parts forward. Our experience with Indian vendors has been that they tend to stay quiet when things don’t go as planned. Most clients can adjust their schedules, provided they are given some advance warning. Avoiding last-minute surprises would help ensure the client retains confidence in the supplier.

4. Train: Especially for a small enterprise, a key component of survival is building skills among its employees. Staggered working and the inevitable quarantine period of an employee with COVID means that work can come to a standstill if a key staff member is not present. Encouraging staff to gain a basic understanding of cross functions would be critical in making sure that work gets done even without full strength.

5. Motivate: This is a time when many tend to feel hopeless. The toll that COVID has placed on us all is starting to wear individuals down and the fact that there is no end in sight can be demoralising. Keeping staff motivated is critical in a time like this. Employees need to know that they are working towards keeping the business alive and that their efforts will ensure that there is still a business around once the pandemic eases off!

As we said in the beginning – this has been a very tricky time to steer a business forward. The necessity for a manufacturing plant to operate in person has only made that tougher since not everyone has the privilege to work from home. At the same time, without manufacturing, the economy, in general, starts to stumble and could collapse in a manner that causes long-lasting damage. Only by carefully navigating through the current climate can businesses plot a course for sustainability beyond the pandemic.

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1. The Challenge of Injection Moulded High-Performance Plastics

2. Polymer Prices Go to the Moon

3. PEEK - The Impact of Carbon Fibre Fillers on HPV Bearing Grades

The high performance plastics space is a wide spectrum of different products, each with properties, characteristics, and processing nuances that could take a lifetime to fully learn. On the one hand, melt-processible plastics – such as Polypropylene, Polyethylene, ABS, and Nylons – form the mainstay in terms of volumes, since these are commonly used in consumer goods and are both cheap and relatively easy to handle. In contrast, non-melt processable polymers – such as PTFE (Teflon) and UHMWPE – are relatively niche in their application and can only be machined into a final component using a ‘stock shape’, such as a rod, sheet, or tube.

Somewhere in between these two extremes are a collection of polymer grades that, while being melt-processable, are still mainly machined, due to certain challenges that not everyone can surmount in the moulding process.

Our journey through the polymer space has seen us delve deep into two such plastics: PEEK and PPS. While both PEEK and PPS are certainly injection mouldable (that is to say, they have a decent enough ‘melt flow’ that would allow them to be injected into a mould to give a final shape), there remain some complications with regards to the processing.

1. Temperature – both injection moulding PEEK and PPS requires melting at temperatures well above 300°C. This implies that any heating equipment designed for low-temperature plastics, such as Polypropylene (which melts at ~160°C) may struggle to maintain such high temperatures

2. Equipment – while higher temperatures can be attained using additional or higher kilowatt heaters, the equipment itself often needs to be modified to handle PEEK. Our own experience with compression moulding told us that PEEK reacts to metals in a way that makes handling it in its liquid state very difficult. The screw and barrel of a normal injection moulding press would be unlikely to survive more than a few months with PEEK flowing inside it

Similarly, the mould itself would need to be specially constructed to maintain consistency over the long term

1. Cost – one of the nice things about low-cost polymers is that trials are not expensive. The mould is usually the bulk of the development cost, after which throwing raw materials into the mix until all the kinks are ironed out does not burn any holes in one’s pocket. Polypropylene, for example, is presently selling for ~US$2 per Kg (after a recent spike of over 75%!). In contrast, injection moulding grades of PEEK sell for ~US$100 per Kg, while PPS is a slightly more sedate ~US$25-30 per Kg. In other words, we’re looking at a cost multiplier of 12-50X, meaning each trial becomes expensive to conduct and the financial risk of not getting a part right can be significant.

2. Properties –  compounding the cost issue is the fact that PEEK and PPS are temperamental materials. PPS, for one, tends to crack easily unless we use exactly the right combinations of temperature, pressure, and other fillers, such as glass. PEEK, which is a little better behaved, can still exhibit excessive shrinkage in some areas (leading to tool modifications and more trials), and also prone to internal stresses unless annealed properly.

With so many hurdles to getting it right, there is little doubt that even medium to high volume project requirements prefer to machine these high performance polymers from stock shapes rather than mould them. The risks involved in moulding mean that the upfront development charges do not only include the cost of making the mould but also need to factor in high trial costs, which push the economics back in favour of machining.

However, there will always be parts that cannot be machined; where the dimensional complexities entail that injection moulding is the only way forward. One of the reasons that both PEEK and PPS are so sought after in fields such aerospace, automotive, and chemicals is that there exist few other materials that have both the physical strength, are lightweight, and have the chemical resistance needed to hold their own in any environment. Therefore, when PEEK and PPS are needed, there are no alternatives for an OEM other than to invest in the development of these components. In such a situation, processors that understand the material, invest in the right equipment and are willing to take a chance to develop and learn the behaviour of these polymers stand the best chance to thrive in an industry where injection moulding has devolved into a very commoditised space.

At Poly Fluoro, we have always stayed one step ahead in terms of our understanding and our willingness to explore new high performance polymers. We did this when we put up India’s first paste-extrusion plant for PTFE tubes. We did it again with expanded PTFE, where we remain India’s only manufacturers and where we are even presently developing new variants of ePTFE tapes, tubes, and membranes for specialised applications. The same boldness allows us to expand into PEEK and PPS injection moulding, while our success with our other ventures fills us with the confidence that here too, we will succeed.

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1. Case Study - Development of a 4-axis PEEK Valve

2. Polyphenylene Sulfide (PPS) - A robust polymer with multiple applications

3. The Effectiveness of PEEK Compressor Valve Plates

Anyone even remotely associated with the polymer industry would have noticed a rather worrying trend of late. Across the board, a host of different polymers have seen price increases such as the industry has scarcely experienced before.

The curve has been so steep in some cases (prices are being revised almost daily), that it has forced many raw material suppliers to declare force majeure clauses to avoid being wedded to existing rate contracts. 

For a company like ours – which has seen significant price hikes for PTFE resins in the past – this movement, while concerning, is not something unheard of. Between January 2017 and June 2018, the PTFE resin prices increased some 67%, jumping every month as it went from ~US$7.3 up to ~US$12.2 without stopping to pause. Today, we’re seeing something similar with other polymer prices, most notably Nylons (PA6, PA66), Polyacetals (POM/Delrin), Polypropylene, and ABS.  

Like with the case of PTFE prices in 2017-18, here too, the explanations are many. With ABS, for example, we were told that a fire at one of the main ABS manufacturers in Taiwan has constrained global supply and caused the spike. In the case of PA66, PP, and POM, the stories are vaguer – ranging from the impact of the cold spell and blackout in Texas to the contraction in the oil markets. Most common is the idea that after a tough 2020, resin suppliers have decided collectively to play opportunist and use the current scenario – where business sentiment and consumer spending seem to be on a bit of an uptick – to recalibrate prices that have been stagnant for most of the past 2-3 years.

As diverse as the presumed drivers for the cost hikes are, the expectations for when things will stabilise are also highly uncertain. Most opinion rests on the idea that prices will stabilise around June 2021, although it is somewhat likely that after the recent shock to shipping and trade brought about by the Suez Canal blockage, things might take until July/August to reach some kind of equilibrium. This is not to say that prices will revert to their earlier levels. As we saw with PTFE, steep shocks such as this rarely rewind back to their starting points. After PTFE prices spiked in June 2018, there was a gradual easing off, but the prices still settled at a level roughly 45-50% above their earlier lows. This became the new normal around which manufacturers and their clients based their new pricing models. The fact remains that ultimately there is a trade-off between price and volume and a manufacturer of polymer resins that experiences a volume contraction less than that of the value increase per Kg will be better off with the higher prices.

So where does this leave manufacturers? Polymers such as PA66 and POM are more geared towards engineering plastic applications, so there is usually a scope – as there was with PTFE – to re-work rates with clients and move to a higher price point. It’s never easy to do this, but when the event is so systemic, clients usually relent, even if there is a sometimes uncomfortable period where they may go looking for alternatives before realising that higher prices are here to stay.

However, in the case of PP and ABS, the situation remains tricky. These are low margin polymers, which find applications in consumer products. The price sensitivity of the end-customer means that an overnight revision is rarely possible, and this puts the manufacturer in a very difficult position. The only viable option for many is to stop supplying materials, which is hardly a solution, especially after so much of 2020 was already lost to the Covid pandemic. In India, the government has been asked to restrict raw material exports and to ease import duties, however, the former has not happened while a 5% increase in import duties since the 2021 budget has only made the local pricing worse.

Amidst this turmoil, it remains to be seen where the markets will eventually settle. However, history and economics do suggest how things might play out. First, with margins already shockingly low in the injection moulding industry, manufacturers would rather shut shop than work with higher input costs without corresponding price increases. When this happens, the resultant supply-side crunch would see an inevitable improvement in realisations for manufacturers around the new polymer resin prices. As resin prices ease off slightly, some capacity will return to the market, but the price points will remain at higher levels, even as new/returning manufacturers eventually gravitate back to their old margin levels.

One thing is for certain. After a gruelling 2020, manufacturers must now brace for another storm that, like the pandemic, doesn’t quite come with an end-by date.

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1. The mysterious relationship between Fluorspar and PTFE prices

2. PTFE Pricing Update - The Impact of Anti-dumping Duties

3. Mapping the PTFE Price Increase - An Update