Finat, the European association for the self-adhesive label industry has been alerted by growing concerns about the tight market conditions facing its members.
In the second half of 2009 and first quarter of 2010, the industry has seen strong signs of demand recovery. As a result, the market decline for the year as a whole in 2009 was restricted to 5.3% compared with a double digit decline in the first half of that year. This upward trend continued In the first quarter of 2010, and demand for label materials grew by 12.5% compared to the same quarter a year ago.
However, says Finat, growing business optimism has been tempered by recent developments in the raw materials market. While paper manufacturers have been adjusting their capacity temporarily or even permanently throughout 2009, the recovery in demand has pushed pulp prices to all-time highs. Also in the filmic materials segment, refineries and feedstock suppliers have adjusted capacity in the course of the demand crisis and price increases in the range of 5-10% for PE and PP have recently been announced.
“The sector appears to be facing a classic example of bottoming out of the economic cycle,” comments Finat Managing Director Jules Lejeune. “The net effect is that there is great pressure on the label converters to cope with the tight market conditions at present. Business prospects for the sector therefore remain fragile.
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