Flexible Packaging Europe (FPE) has voiced concerns about the recent polymer market developments in Europe, with an increased number of ‘force majeure’ declarations or ‘maintenance’ announcements creating sudden and significant shortages, along with price increases in the supply-chain. For an Australian perspective, PKN spoke to flexible packaging expert Joe Foster of OF Pack.
The effect on converters means they may have difficulties in supplying finished products to meet customer requirements, particularly in the food and beverage sectors, which have seen increased demand during the pandemic with its many lockdowns.
Joe Foster, managing director of flexible packaging company OF Pack, also points to current policies in place in major production regions of China to improve air quality and pollution as a major cause of these shortages.
“Many leading polymer manufacturers and film blowing factories are announcing reduced capacity or short-medium term disruptions, which are causing shortages in the global market, including Europe,” Foster tells PKN.
“This very much impacts Australian-based manufacturers too, adding to the existing challenges we already face due to our geographical location and distance from raw material suppliers offshore, as well as the current pandemic and the excessive increase in freight costs from China.”
During times when most restaurants are closed and more people are staying at home, European consumers depend on a safe and stable supply of food and beverage products.
Almost half of the fast-moving consumer goods (FMCG), excluding beverages in the European Union, are packed with flexible packaging. Examples are all kinds of packaged foods, pet food, personal and household care products.
“We are concerned about this unfortunate situation, which appears like a repetition of the first half in 2015,” says Guido Aufdemkamp, FPE executive director.
“The shortening of production capacity with different reasons and arguments in such a short period seems either the test or use of market power.
“In particular, after 2015 our members would have expected continuous investment in, and regular maintenance of, the ageing European polymer production facilities.”
Both SMEs and multi-national manufacturers of flexible packaging are suffering from this situation of the insufficient raw material supply causing increased complexity in the production schedules of FPE’s member companies.
“The relatively minimal local capacity for creating raw materials means that many Australian manufacturers rely on these, as well as pre-manufactured packaging films such as PET and PP, to be sourced offshore,” explains Foster.
“Any shortfalls in the global market typically affect Australian prices also, yet the question remains who should bear the cost increases that occur in times of short supply when pricing is driven upwards, as ideally cost increases need to be shared among all involved along the entire supply chain.”
