Pafa warns of ‘substantial’ price increases

Pafa chief executive David Tyson said polymer prices were, in some cases, adding an extra €250 (£199) per tonne on top of previous increases, of between €50 and €100 per tonne.

He added that there were insufficient polymers available to firms seeking additional volume, and said there was “unlikely to be any respite in the summer season”.

“We are being forced to look for recovery of these exceptional cost rises if we are to secure the UK-based flexible packaging and film suppliers,” he said.

Pafa has highlighted that polymer suppliers are moving away from index-linked pricing mechanisms that were not responsive enough to accurately represent massive price changes.

“With around four-to-six week lead times for flexible packaging products, the raw material costs at the time of manufacture no longer bear any resemblance to index levels at the time of order,” said Tyson.

Ron Marsh, chief executive of rigid plastics packaging group RPC, has also expressed concerns about suppliers raising prices irrespective of industry price indexes, which would lead the firm to continue to pass these increases on to customers.

“Up to now we’ve had the happy situation where both the prices we pay and prices we charge are based on the indexes,” he said.

Tyson added that any customer resistance to the price increases could result in businesses “failing within weeks due to cash flow problems”, but recognised the pressures exerted on the supply chain by the retailers.

“The buyer/supplier relationship will be critical in the coming months. In spite of the gloom we believe the supply chain can be managed effectively, but only if all parties adopt a realistic and sensitive approach,” he said.

How are you handling rising prices, and can packagers pass on price increases to clients? Leave your comments below.

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