Escalating Raw Material Prices will make Plastics Uneconomic for many Applications

30/05/11

Tony Bestall, managing director of Wrexham-based colour masterbatch manufacturer Silvergate Plastics, has this week commented publicly on what he terms , "the steep price increases of polymers and other raw materials."

Speaking at a local business event, he said:

"Over the last twelve months, we have seen the price of LDPE increase by 25%, with PP and Polystyrene going up by 28% and 13% respectively. Pigment and additive prices have also shown increases, between 5% and 20%. However, the material showing the biggest price escalation has been Titanium Dioxide (TIO2), where the cost has risen by as much as 40% since October 2009! This material is in the vast majority of our products.

"Cost increases of this type against a background of single figure inflation are very difficult to manage and, in a price sensitive market like packaging, I can foresee plastic being driven out in favour of other, less effective and less easily recycled materials. This will not only be bad for the plastics industry but also a host of others, including the manufacture and retail of food and household products."

Tony Bestall was quick to point out that when this happened in the past the price bubble burst and it was the raw material manufacturers and processors that suffered. He continued:

"Over the last twenty years, the plastics industry has created solutions to many packaging problems and we have gained a valuable share of the market. We could lose that share very quickly if we do not remain cost effective; less plastic packaging will simply mean less raw materials. I appreciate the need for all suppliers to make acceptable margins, however raw material costs need to remain within acceptable limits to achieve the economic recovery for which we all strive."

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