Despite a market recovery following the 2008-9 recession, demand for European food and beverage packaging in specific areas is being hit by “structural changes” including the sustainability trend.
Applied Market Information (AMI) drew this conclusion in a new research report, which notes that European plastic converters are also suffering from the high cost and poor availability of essential raw materials.
According to report author Carole Kluth: “Trends in light-weighting, recycling, environmental and sustainability issues continue to challenge plastics usage in a variety of applications, but particularly in packaging.
She added: “PET [polyethylene terephthalate] for example, is seeing much slower growth now even though there are lots of developments in new markets and applications, for example in beer and wine packaging.”
This was due to the growing availability of recycled PET (rPET), Kluth said, as well as drives to reduce bottle weights and changing consumer drinking patterns.
High polymer prices
She told FoodProductionDaily.com: “Demand [for food and beverage packaging] is generally slowing because of underlying factors, not just because there has been a recession.
“Brand owners are constantly looking to reduce packaging (to be able to show sustainability, reduce carbon footprint, reduce costs etc.) which is thus impacting on the demand for polymers used in packaging.”
Kluth also noted that prices paid by European producers for polymers (used to make thermoplastics) rose almost continually from December 2009 to June 2011.
“[Also] because of increasing feedstock costs, converters have also had to contend with record high prices and severe shortages for a whole range of pigments and additive materials used in plastic products,” she added.
Price hikes and raw material shortages for European converters were principally due to increased demand from peers in Asia and Russia, India and China, which “sucked raw materials away from European markets,” Kluth said.
She added: “Supply was further constrained by delays in new polymer capacity coming on stream in the Middle East and cutbacks in capacity within Europe.”
But Kluth said rising costs for inputs was a global concern, and were not a “huge issue” for EU converters striving to remain competitive going forward.
“More significant are likely to be things like labour and regulatory costs, etc., which will impinge on European competitiveness,” she said.
Strikes and plant outages
Kluth wrote in the report that European plant shutdowns in 2010, due to feedstock shortages and French strikes, also contributed to tight supplies of low-density polyethylene (LDPE), polypropylene (PP) and polystyrene.
A recovery in European demand had also seen Germany gain the ascendency within the bloc’s plastics processing industry, she said, due to economic problems in Spain, Portugal, Italy and Greece.
That said, per capita consumption of thermoplastics (on a processing level) was shrinking across Europe, Kluth noted, with polymer consumption expected to be around 74kg/head in 2011, against 82kg in 2007.
Kluth said: “The decline in per capita consumption is because less polymers are being processed. This is particularly noticeable in somewhere like the UK where there has been quite a decline in plastics processing.”
But she added that this did not mean the UK, for instance, was using fewer plastic items, simply that they are being made elsewhere.