EuPC, the Brussels-based trade body for plastics processors and converters, is warning that high oil prices are threatening the recovery of the industry, and the threat is magnified by a shrinking number of OEMs able to exact extreme pricing pressure on their plastics processing suppliers.
The price of plastic products will have to increase in the coming months, said Alexandre Dangis, EuPCs managing director. The trade group blames increasing raw material prices, primarily those based on petrochemicals, and a shortage of raw materials in Europe, as the primary culprits for the current situation.
According to the EuPC, since December 2006 the prices of plastics and additives have reached or are very close to record levels. Prices, on average, have increased from 50% (for polypropylene) up to 100% (for polystyrene) since the beginning of 2004, with a further 15-20% price hike expected in the coming six months.
Dangis fears customers, especially multinationals and large OEMs, will severely limit processors chances of recouping some of their additional costs and further pressure profitability. EuPC says that the plastics industry has absorbed recent price increases by gains in productivity, energy savings, product innovation, and new market developments. However, these efforts dont make up the increase in raw material prices and wages, said Dangis.
The EuPC also noted that uncertainty of supply has become a near-certainty. For the past two years our manufacturers cant rely on their orders of raw materials being executed, complained Dangis. Partial delivery of 80-90% of the purchase orders for certain raw materials is a widely accepted fact of life.[email protected]