Good news and bad news

12 May 2011

FINAT, the European association for the self-adhesive industry, reports that demand for self-adhesive label materials in Europe continued its strong recovery in 2010.

From the peak of the financial crisis in mid-2009, demand returned to pre-crisis levels during the course of 2010. Last year, an overall volume of around 5.7 billion m2 was recorded, an increase of 11.4%, compared with 2009, and 3.5% above the level recorded in 2007, which was the year before the financial crisis hit.

Underlying this growth was the strong, 9.5% recovery of the demand for rolls of paper-based label materials, representing some 70% of total demand for self-adhesive label materials. Exceeding this growth, however, was the increase for filmic roll label materials (PE, PP and others), which amounted to 15.3% over the previous year. Filmic materials therefore resumed their rise in the share of European self-adhesive materials demand from just over 15% at the start of the decade to over 22.5% in 2010.

However, this recovery does not come without significant future risks and concerns. During the summer of 2010, FINAT members expressed concerns about disturbances in the supply chain.

Over the past few months the pressure on raw materials has become even worse. Between January 2010 and January 2011, the benchmark pulp prices increased by between 20-25%, while resins for LDPE, PP and PET, which are crucial to filmic label materials, increased by 65-75%. As reported in this column previously, ink suppliers have been forced to increase their prices by up to 30% due to raw materials shortages that have arisen for a number of reasons. And continuing unrest in oil-producing countries is further exacerbating the situation.

According to FINAT Managing Director Jules Lejeune, “Capacity limitations cause a gap in supply versus double-digit growth in demand: a gap that is only closing slowly. Our members are confronted with quarterly price adjustments or even ‘spot’ prices on materials not yet delivered. Under such market conditions and because of the time lapse, contractual raw materials clauses only offer limited shelter. Ultimately this could affect the financial stability of the label business.”

Meanwhile, technology for the production of labels has taken huge strides, as reported in our Narrow-web feature in this issue. The technology is there, the market is there, but with the raw materials situation not showing any signs of easing, there is still uncertainty about the future. However, the industry remains positive, suggests FINAT’s member survey.

Maureen Byrne

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