PACKAGING MARKET
Better to turn down orders than produce unprofitably? Plastics converters caught between high raw material prices and exploding energy and logistics costs
 Packaging producers raise concerns about the alarming cost situation (Photo: iStock/rihardzz) |
The high cost of energy and polymers is exerting increasing pressure on film and packaging producers. How should they react to increased costs? The situation is acute, as a company spokesperson for packaging manufacturer Mondi (Johannesburg, South Africa; www.mondigroup.com) stated, “Like all market participants, we are seeing significant price increases on the part of our suppliers together with shortages of certain raw materials such as speciality plastics across all areas of the value chain – from raw material prices through to energy and transport costs.”
Many of the converters contacted by Plasteurope.com were in favour of passing on the current price hikes to their customers wherever possible. “We are, however, meeting with considerable resistance among major food groups and discounters in particular,” said a spokesperson for packaging manufacturer Paccor (Düsseldorf, Germany; www.paccor.com). “While we have only been able to pass on a portion of the costs so far, we will be consistently passing on all price increases to customers in 2022.” The risk involved in this approach is a loss of orders.
A current survey by plastics packaging association Industrievereinigung Kunststoffverpackungen (IK, Bad Homburg; www.kunststoffverpackungen.de) also covers this topic. The survey shows that more than a quarter of converters have already turned down at least a number of orders because the revenue would not have covered production costs (see Plasteurope.com of 13.01.2022).
In light of the cost situation, rigid plastics packaging producer Gizeh (Bergneustadt, Germany; www.gizeh.com) approached its customers last year, as sales manager Frank Kriener reports, “Given the explosion in energy prices, however, we will no doubt be forced to talk to our customers again in the near future so as to secure adjusted price agreements. We have concerns about how the retail sector will react.”
No easing of pressure would appear to be in sight to release converters from this oppressive grip of the cost of raw materials, logistics, and energy. “At the moment, there is nothing to suggest that this is a short-term development,” said a company spokesperson at plastics manufacturer Alpla (Hard, Austria; www.alpla.com). “The cost situation for plastics converters is particularly tense,” a spokesperson from Greiner Packaging (Kremsmünster, Austria; www.greiner.at) confirmed: “It would seem that the raw material situation will be continuing tight this year as well, which could result in further price adjustments.”
The companies surveyed by Plasteurope.com are so far not afraid of any negative impact on their ability to deliver. Packaging maker Coveris (Vienna; www.coveris.com): “We are also being forced to pass on the increased costs to our customers. As this has worked out well so far, we have not had to refuse any orders as yet,” reported CEO Jakob Mosser.
Many of the converters contacted by Plasteurope.com were in favour of passing on the current price hikes to their customers wherever possible. “We are, however, meeting with considerable resistance among major food groups and discounters in particular,” said a spokesperson for packaging manufacturer Paccor (Düsseldorf, Germany; www.paccor.com). “While we have only been able to pass on a portion of the costs so far, we will be consistently passing on all price increases to customers in 2022.” The risk involved in this approach is a loss of orders.
A current survey by plastics packaging association Industrievereinigung Kunststoffverpackungen (IK, Bad Homburg; www.kunststoffverpackungen.de) also covers this topic. The survey shows that more than a quarter of converters have already turned down at least a number of orders because the revenue would not have covered production costs (see Plasteurope.com of 13.01.2022).
In light of the cost situation, rigid plastics packaging producer Gizeh (Bergneustadt, Germany; www.gizeh.com) approached its customers last year, as sales manager Frank Kriener reports, “Given the explosion in energy prices, however, we will no doubt be forced to talk to our customers again in the near future so as to secure adjusted price agreements. We have concerns about how the retail sector will react.”
No easing of pressure would appear to be in sight to release converters from this oppressive grip of the cost of raw materials, logistics, and energy. “At the moment, there is nothing to suggest that this is a short-term development,” said a company spokesperson at plastics manufacturer Alpla (Hard, Austria; www.alpla.com). “The cost situation for plastics converters is particularly tense,” a spokesperson from Greiner Packaging (Kremsmünster, Austria; www.greiner.at) confirmed: “It would seem that the raw material situation will be continuing tight this year as well, which could result in further price adjustments.”
The companies surveyed by Plasteurope.com are so far not afraid of any negative impact on their ability to deliver. Packaging maker Coveris (Vienna; www.coveris.com): “We are also being forced to pass on the increased costs to our customers. As this has worked out well so far, we have not had to refuse any orders as yet,” reported CEO Jakob Mosser.
28.02.2022 Plasteurope.com [249713-0]
Published on 28.02.2022