Raw material price rises threaten recovery of flexible tube industry in Europe

Significant rises put pressure on European tube industry margins

Rises in raw material prices are threatening the European flexible tube industry according to the European Tube Manufacturers Association, etma. The organisation says despite a double-digit increase in order income on some tube diameters and variants, which etma members predict will bolster tube deliveries enough to exceed the 10 billion unit mark by the end of 2010, the industry remains in jeopardy.

According to etma, oil prices soared by 23% between June 2009 and June 2010, while aluminium prices saw a significant 40% price hike for the same period. Additionally, the price of plastic materials including PE-LD and PP rose by 53% and 64% respectively, while paper prices went up by 77%. The result has seen many contractors and packaging manufacturers raising their quotations. Furthermore many customers are asking for longer payment terms adding further pressure to tube producers’ liquidity.

“The raw material price developments in the last 12 months are now drastically squeezing the European tube manufacturers’ margins,” commented Martin Hinz, president, etma. “This is a major problem for the industry because in any business reasonable margins are a precondition for securing innovation, sustainable production and necessary investment in new technologies.”

Companies