The Packaging and Films Association (PAFA) has issued an industry-wide warning that the prices of raw materials could see a “significant increase” and “extremely tight supply” in as little as two months, according to the report of British Plastics and Rubber.
The price of polymers has suddenly increased remarkably since early this year, bringing price increases in polyethylene.
Barry Turner, PAFA CEO, was quoted on the bp&r report: Some four to five weeks ago the signs were there that the end of falling prices had come, but then what surprised and dismayed many was the size of the price increases that have been imposed on converters in March combined with significant price rises already notified and to come in April.”
The price increases come as a response to supply issues, with an estimated 20 percent of European capacity out for maintenance or force majeure coinciding with a similar reduction in imports as a result of higher duties on imports from the Middle East and more attractive prices and exchange trades available elsewhere.
PAFA also said the situation is “made worse” by the fact that the published UK indices have so far failed to reflect anything like the magnitude of the increase. “This has caused some members to hastily consider how to rebuild their business models to better manage shocks like this in the future,” Turner continued, “it is difficult to find any parallel anywhere else where converters have to manage such extreme volatility in raw material prices.”
In its statement, PAFA has called on all companies in the industry to work together through this extremely difficult period in order to find a way to avoid these sudden shocks to the market and the enormous damage they inflict.