Packaging manufacturers have warned of a possible increase in the price of packaging, following a recent surge in the cost of polymer resins used to make plastic.
Polymer prices have more than doubled since November, rocketing from an average price of approximately £800 per tonne to over £1,600 per tonne in April.
Polyethylene and polypropylene resins are used to make a range of packaging products, including plastic bottles, bags and film, as well as a variety of food packaging and containers.
Whilst some packaging manufacturers have been doing their best to keep prices low – helped to date by long-term supply contracts – the sustained hike in prices has increased pressure throughout the supply chain.
If raw material prices remain high, packaging manufacturers across Europe will inevitably be forced to increase prices, thereby squeezing profit margins for supermarkets and smaller retailers, which will eventually lead to increased costs for consumers.
Renato Zelcher, chief executive at Crocco – an Italian polyethylene manufacturer – told the Financial Times that the crisis spelled “disaster” for his company’s results, and warned that costs will inevitably be passed on to the consumer.
“Eventually our customers will notice higher prices. If we don’t do that, we will go bankrupt,” he said.
Polymer prices have risen to a six-year high this spring, due to an increase in demand and a slump in supplies, driven by a combination of factors.
US polyethylene production and exports to Europe were hit last autumn following a damaging hurricane season. Imports into Europe have been hit further by a lack of shipping containers, whilst an increase in the price of crude oil – from which polymer resins are derived – has squeezed costs further still.
