EuPC: High raw material prices cripple early recovery of European plastics converting industry

European Plastics Converters gave warnings today of the hard economic blow currently being sustained by the sector from the radically sharp and dramatic increase in their raw material price.

EuPC (www.eupc.org), the Brussels-based trade body for the industry said that chances of an early recovery of the European Plastics Conversion Industry have become slender. Very tight margins are forcing companies in the industry, most of them SMEs, to pass these price increases on to their customers.

"The record oil prices of the last few months have created an environment for dramatic increases in the price of most plastics materials. This is creating major problems for the plastics conversion industry which is also suffering higher energy and distribution costs" commented David Williams, President of the European Plastics Converters.

Depending upon the conversion process, raw materials currently constitute between 35% and 70% of the total costs of Europe’s plastics converters. For most of the tonnage processed, the raw material cost exceeds 50% of a converter’s turnover. Plastics product manufacturers are under intense pressure to pass the higher raw material costs on to their customers. The combined effect of a poor economic climate and intense international competition has put even greater pressure on already slim margins.

“We have had the most rapid escalation of costs in the industry since the 1970s and it is certainly testing our skills to handle this,’’ continued David Williams. “We have to look to more efficient use of materials, processing technologies which use less energy and we have to manage our cash flows in an even tighter way. But above all, the whole of society benefits from the use of plastics and its contribution to sustainable development in the entire supply chain. The pain therefore, must be shared. Cost-increases of this magnitude must be passed on down the line. Otherwise there is a real risk of companies failing and supply being disrupted.”

Users should recognise that plastics materials and products are highly resource-efficient. They are energy-efficient in their manufacture and help to save energy in their use through their light weight. Plastics can be seen to be a solution to problems posed by increasing energy costs.

European Plastics Converters, Brussels, Belgium

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