Cautious optimism for food and drink packaging sector

By Jane Byrne

- Last updated on GMT

Related tags Polymer Plastic Plastics

Packaging converters trying to pass on recent polymer price hikes to their food and drink manufacturing customer base may feel less resistance to such moves in the coming months with indicators of a new resilience in that packaging sector, claims an analyst.

Plastics analyst with Applied Market Information (AMI), Carole Kluth, told that destocking by food and drink manufacturers in the fourth quarter of 2008 hit plastic packaging suppliers hard, but that volumes are set to improve as processors take a less cautious approach and the destocking effect unwinds.

She added that while it is not yet clear whether the credit lending squeeze has eased up, packaging companies that have successfully managed to renegotiate their debt will be able to ride out the year despite the lower than average demand that is forecast for the remaining three quarters.

Meanwhile, according to a Plastics Europe News article, the hike in the cost of polymers such as low-density polyethylene (LDPE) is as a result of tightness in ethylene supply and growing concern about supply reliability in view of plant closures and production cutbacks.

The article also reports that polypropylene (PP) is the best performing polymer sector with improving sales and higher prices in March, with polystyrene (PS) producers also managing margin gains; however, it claims that the much anticipated revival in PET resin sales did not materialise last month.

Dow Europe recently announced a price increase for polyethylene (PE) resins, based it claims on the raw material costs that it is experiencing coupled with its need to restore its margins.

The chemical company has raised the price for all grades of its LDPE as well as its linear LDPE and high density PE resins by €80 per tonne, which was effective from the start of this month.

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