According to Industrievereinigung Kunststoffverpackungen eV (IK), the largest association for plastics manufacturers in Europe, the plastics packaging industry is enjoying full order books, and the prognosis for the third quarter is promising overall.
However, the industry is concerned about the disproportionately high cost of raw materials as well as the shortage of certain primary materials. The IK says that the clients of the plastics packaging producers have ‘lost their patience with the current situation’.
This sentiment is echoed by the British Plastics Federation, which says that shortages of some key polymers and associated raw material price increases are holding back sectors of the plastics processing industry.
BPF Director General Peter Davis comments: “Just at the time that strong evidence of a recovery in companies’ performance is emerging, it is extremely disappointing that companies lack the confidence to engage in business development projects because of faltering raw material supply.”
While there are issues across the board, the pain is being felt most among plastics packaging manufacturers that use polyethylene and polypropylene. Prices of HDPE have increased by over 30% in Euros in the year May 2009 to May 2010, and buyers of polypropylene saw increases of as much as 50% in the same period.
The BPF explains some of the reasons for this situation. First of all, it says, the pace of recovery has taken the industry by surprise. There has also been a particular surge in demand in China, which has absorbed huge quantities of plastics raw materials. Overall demand there is now as much as 50 million tonnes/year.
Secondly, a succession of ‘force majeure’ situations announced by some raw material suppliers have exacerbated the situation. However, the IK explains that European jurisprudence is very clear on the definition of a ‘force majeure’ which must have an exterior cause, or an ‘Act of God’. A mere assertion of technical problems with the equipment is not sufficient to come under this category.
The third reason highlighted by the BPF is that investment trends in raw material production are pointing more towards the Middle East and Far East, where there is a perception of faster growth.
It is a pity that the upsurge in orders for plastics is being hampered by shortages and price rises, but there seem to be no immediate solutions to these problems, which are not restricted just to plastics, but all other raw materials too.
Maureen Byrne,
Editor
Maureen Byrne
