Industry insights

When will packaging price rises slow down? Oil prices continue to climb

Packaging price rises have been relentless this year, with each key manufacturer issuing as many as five new price increases.  Naturally, PurePac customers have been asking when the pricing will calm down.

When tracking the polymer indices and seeing ICIS LOR HDPE stablise for seven weeks in a row, many of the manufacturers thought prices would level off in June.  However, this week we saw the average price during the final week of May jump.  We also saw oil prices rise for the second time in one week this Wednesday.  

Reportedly this was based on signs of strong fuel demand in the western economies due to the successful vaccine rollouts, leading to increased confidence to travel by car resulting in surplus oil stocks depleting.  

Since January, the price of polymer has increased by over 50%, steel by nearly 70% and timber by over 80%.  Polymer prices tend to follow crude oil with a time lag of approx six weeks.  Further oil price increases combined with one of our global manufacturers announcing this week “we currently assume that this tense situation (with raw materials) will last at least until the end of 2021” the positive signs of packaging prices stablising have been dashed.

We already know three of our key suppliers are moving again on price in July.  We were hoping these would be the final increases this year, however, the outlook now is looking unpredictable. Surprisingly, other than the mention of issues with cement and construction prices increasing, no one seems to be talking about this elephant in the room – packaging prices have increased by over 40% since January. Why isn’t this a major talking point?

Do any of my contacts have a view on this?





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