Analysis: The materials price crisis

In the cartonboard market where CPC operates, suppliers of board have been pushing hard to raise their prices over the last year. The trend has been blamed variously on their own input costs going up, a glut of demand from China and serious pulp supply problems caused by strikes in Sweden at the start of the year and an earthquake in Chile.

But it has led to a crisis. Anecdotally, carton printers have told Packaging News that they are now facing lead times on ordering board of up to 20 weeks, compared to an average of four to six weeks in better times.

Worse, packaging buyers at the big brands and supermarkets are fighting hard not to take the rises. While acknowledging that there is a supply issue, one packaging buyer contacted by Packaging News this week said: “You always hear the same reasons for prices going up – but you never hear about it when those input costs come down.”

The smaller brands, meanwhile, face a position where they may not be able to afford the kind of materials costs that are being quoted.

But piggy in the middle is the printer and converter, many of whom are finding their finances squeezed by every-rising input costs that they simply can’t pass on.

There may not be a bloodbath and Packaging News has reported many positive results statements from packaging company in recent weeks. Indeed, many companies have benefited from being able to push through price rises.

Nobody can blame them for that – it’s business and they have to do what they can to satisfy the shareholders, pay the bills and invest for the future.

But that won’t take away from the fact that the raw materials pricing situation has already claimed at least two big scalps this year in UK packaging – and it could well claim a few more.

What is your experience of the raw materials pricing situation? Join the debate and leave your comments below.

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