Pressure on the UK’s packaging industry shows no sign of abating as polymer prices continue to hit record highs.
The price of polymer resins – the material used to make plastic – has risen sharply for six consecutive months, from an average price of around £800 per tonne in November to £1,850 per tonne in May – a 127% increase.
Despite industry efforts to prevent costs being passed on to customers, the sustained hike in raw polymer prices – driven by a shortage of polymer supply – is likely to lead to an increase in packaging prices for a range of household items.
As the intensifying crisis ramps up pressure on manufacturers across the continent, a leading industry body has warned that the economic survival of numerous small and medium enterprises (SMEs) is under threat, along with the production of a variety of products, including essential goods for packaging supply chains.
According to European Plastics Convertors (EuPC), there are more than 50,000 SMEs across the industry in Europe, 90% of whom have been affected by the supply crisis.
The body reports that many companies have been forced to reduce production and accept fewer or no new customers in order to honour existing agreements, with the supply of essential goods for the food and pharmaceutical industries threatened if the crisis continues.
“Manufacturers of plastic products all over Europe are experiencing serious bottlenecks in the supply of raw materials since the beginning of this year,” said EuPC managing director Alexandre Dangis.
“Delivery problems have become increasingly widespread, affecting raw materials… as well as special additives that are crucial for the manufacture of compounds and plastic products.
“The serious market disruptions currently taking place all over Europe are a symptom of the structural imbalance in Europe between the local production of and demand for raw materials and additives. Without restoration of that balance, periodic recurrence of gross disruption of the production chain is highly likely. Ultimately, end customers will also suffer damage due to disruptions in the delivery of (semi-)finished products.”
The polymer crisis has been driven by an increase in demand for raw materials since covid-19 restrictions were first eased in the second half of 2020, combined with a slump in supplies, notably from the United States, from where Europe gets most of its supply.
US production and exports to Europe were hit by a damaging hurricane season last autumn, whilst a lack of shipping containers and an increase in the price of crude oil – from which polymer resins are derived – has exacerbated the problem.
