European processors hit unevenly by price jumps

Looking back over the first half of 2005, Fulco van Geuns, head of business development and marketing at Alastian, an online polyolefin purchasing platform operated by Basell (Hoofddorp, Netherlands), says resin prices eased during the first two quarters of the year, "but the recent jump in oil prices and the substantial impact of Hurricane Katrina have put new pressure on raw materials costs," he says.

Van Geuns believes large processors are coming through this crisis better than small-to-medium-sized enterprises (SMEs). "Large converters like Rexam, RPC, and Newell Rubbermaid have all posted results for the first half of 2005 that range from good to satisfactory." He says large processors enjoy the advantages of both the upstream and downstream value chain.

"Their purchasing power enables them to negotiate better prices from resin suppliers and they have more opportunity to absorb higher costs and pass them on to their customers," says van Geuns. "SME''s tend to be squeezed from both ends." The jump in polymer prices is likely to accelerate consolidation of processors in Europe, he says.

Packaging processors are being hard hit, says Haimo Emminger, spokesman for the German Industrial Association of Plastics Packaging (IK e.V., Bad Homburg, Germany). He says his members are now afraid that not only are they being pinched by resin prices, which rose at the end of August and have in many cases risen since, but that they also fear some plastics may be in short supply in the future.

A combination of falling cracker capacity and destruction of refining facilities in the U.S. by hurricanes could also lead some suppliers to siphon material from Europe to North America .-Robert Colvin; [email protected]