During the first quarter of 2024, Europe has witnessed a notable surge in the prices of flexible packaging materials, due to significant disruptions in supply chain, and particularly on the case of shipping security in Red Sea. According to a recent press release by Flexible Packaging Europe (FPE), these disruptions have led to increased prices across various flexible packaging materials, marking a challenging period for the industry.
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Scope of the Press Release
In the recent press release by FPE, it is revealed that prices across almost every category of flexible packaging materials have seen considerable rises compared to the last three months of 2023, primarily due to disruptions in supply of resin and film caused by shipping security concerns in the Red Sea. Despite demand being stable across all material markets, prices have shown an upward trajectory in the first quarter of 2024.
Increased Costs of Operation
Shipping container companies have to re-route their vessels around the Cape of Good Hope since the start of incidents in the Red Sea, actions which costs both time and money for shipping operations and deliveries.
Prices of Flexible Packaging Materials
Both High-Density Polyethylene (HDPE) and Low-Density Polyethylene (LDPE) continued their steady upward trend, with increases of 2.3 % and 4.1 % respectively, following the trend seen in the second half of 2023. Notably, 20-micron Biaxially Oriented Polypropylene (BOPP) film witnessed a surge of 12 %, reaching a price last seen in the second quarter of 2023. Similarly, 15-micron Biaxially Oriented Polyamide (BOPA) film experienced a 2 % rise, while 12-micron Polyethylene Terephthalate (PET) gained another 4 %, nearly reaching its early 2023 price. In addition, 60gsm one-sided coated paper remained steady with no change to its price compared to the final quarter of the previous year.
On the other hand, prices for aluminum foil and coated paper have witnessed declines of 16 % and 24 % respectively, compared to the beginning of 2023. However, although prices remain below the levels observed at the beginning of 2023, when compared to the first quarter of 2020, prices for these materials remain substantially higher, with plastics showing a surge of 27 % and aluminum foil experiencing a staggering 57 % increase.
Photo by © Flexible Packaging Europe (FPE), Press Release, April 2024 via: https://www.flexpack-europe.org/assets/images/6/European-Price-Index_Q1-2024-050f7324.jpg
Uncertainty and Hope for the Future
Analysts anticipate further price surges for paper during the second quarter of 2024, due to rises in pulp cost. Despite challenges in supply chain and uncertainties surrounding shipping routes, there are signs of improvement in overall demand, mainly driven by restocking activities.
However, the growing tension in the Middle East, the continuous threats to ships in the Red Sea and the ongoing war in Ukraine further escalate the pricing issue.
Conclusion
The current situation underscores how fragile global supply chain is and highlights the need for proactive measures to prevent disruptions and stabilize prices in the flexible packaging industry. As stakeholders navigate through these challenges, resilience and adaptability will remain keys in ensuring the continued growth of the European flexible packaging sector.
If you are looking for alternative approaches for your packaging, in order to avoid any price increases, contact our team of experts.
