Premium Beauty News - Price instability for monomers, such as ethylene and propylene, adds up to the continuous increase in the prices of plastic materials recorded since November 2009. This situation is increasingly worrisome!
Françoise Gerardi - Indeed, increases in prices of 19 to 35% of plastic materials were recorded over the year 2010. This critical situation was aggravated by numerous supply disruptions and forces majeures due to breakdowns, strikes and shortage in monomers due to the closure of European units. These rises have been steadily increasing since the beginning of 2011, with 12% to 32% rises according to the material in less than six months and prices currently gaining 5% per month.
Moreover, price variances between geographic zones, to the detriment of European manufacturers, worsen the difficulties of companies. For example:
crystal polystyrene costs 64% more in Europe than in Asia and 23% more than in the USA.
These sharp increases, coupled with those of different energies, make the manufacturing costs of flexible and plastic packaging in Europe even higher and have put a strain on the competitiveness of businesses operating in the area. Thus rises in plastic prices in Europe over one year (January 2010-January 2011) were of 28% for PS, of 32% for Homo Injection PP, of 31% for Copolymer PP, of 19% for PVC, of 25% for PET, of 35% for LDPE, of 21% for Blow moulding hdPE and Injection HDPE, of 23% for Linear LDPE (Butylene) and of 13% for Film HDPE.
Premium Beauty News - Rises that are worsening?
Françoise Gerardi - Absolutely, price rises that are steadily getting worse in 2011 with +12% to +32% in less than 6 months and +5% currently announced every month.
Premium Beauty News - With a constant price rise in monomers?
Françoise Gerardi - Indeed, the 30% price hikes recorded for monomers (ethylene and propylene) over the past 6 months will get worse under the full impact of the geopolitical context.
Premium Beauty News - What seems incredible, is the price difference between geographic zones!
Françoise Gerardi - The difference in price between geographic zones are also very worrying for plastic and flexible packaging manufacturers, suggesting that raw materials produced in zones with cheaper resources (Middle East) have preferred destinations outside of Europe adding to the problems of structural competitiveness of our countries increasingly difficult access to raw materials at competitive prices and in sufficient quantities. A mobilization of Europe must be undertaken with our manufacturers to reverse this destructive trend.
Some examples of price variances:
– Crystal PS: +23% between Europe and the U.S. - +64% between Europe and Asia - +33% between the U.S. and Asia
– Homo Injection PP: +16% between Europe and the U.S. - +22% between Europe and Asia - +5% between the U.S. and Asia
– Blow moulding HDPE: +26% between Europe and the U.S. - +36% between Europe and Asia - +7% between the U.S. and Asia
– Film HDPE: +15% between Europe and the U.S. - +28% between Europe and Asia - +11% between the U.S. and Asia.
The main consequence is that companies are now facing financial difficulties, the situation is getting worse in terms of deliveries, there are no disruptions but postponements in deliveries. If this situation goes on we feel very much concerned by the financial health of businesses that find themselves very weakened and for some of them in alarming proportions.
