How have raw material prices moved in the past 12 months and what is predicted to happen in the coming year?
Adam Barnett, Vice President of Marketing and Innovations at LINPAC, said: “The cost of raw materials has risen to what can only be described as an exceptional level. Industry as a whole, not only in the world of plastics, has faced significant raw material price hikes. These will be continually felt throughout 2011.
“The cost of PET in Western Europe has risen by almost 25% in the past 12 months. In January this year it cost more than €1,300 per metric ton – the highest it has been in three years.
“Similarly, the cost of Polypropylene Copolymer has increased by 24% and PVC by 16% between January and December 2010. Both are forecast to rise by up to 10% during 2011.”
Have these price increases been passed on, either fully or in part, and does LINPAC expect to increase their prices, specifically as a result of the higher material costs?
Adam Barnett said: “It comes to a stage where these increases become unsustainable. Unfortunately, as raw material prices show no sign of falling in the near future, customers will see some of those increased costs passed on; however we will endeavour to mitigate increases as much as possible.
What percentage of the total production costs are raw material costs?
Adam said: “The cost of raw materials is extremely significant and has a huge impact on the total production costs at LINPAC.
What is the outlook for the market in 2011?
Adam said: “The raw material costs are set to continue at the current levels or stay at their current high value for some time. Certainly, the impact of price rises has started significantly impacting the industries profitability and sets to continue throughout 2011.
“With the inevitable pressures from raw material price increases there has never been a greater need to work more closely with our suppliers and customers. The new realities make it even more imperative that we have strong partnerships with our customers and they can be assured we will work hard to support them in the coming months.”