Polymer prices could boom and push up packaging prices across the fresh produce range, according to the trade association representing UK suppliers of plastic film and packaging (both flexible and rigid).
The Packaging and Films Association (PAFA) has warned that one of the recognised price indices used to set polymer prices has inexplicably diverged to the degree that it no longer reflects reality in the marketplace.
The weekly price indices are published for use across the industry to help indicate price movements and are often used to determine price movements to end customers.
PAFA chief executive Barry Turner said: “After an extremely difficult period of increasing prices paid by converters for their raw material, they face a further challenge from an unexplained divergence in the UK polymer price indices which are crucial to maintaining a real-time, realistic view of the cost of polymers and therefore end prices. This divergence is so significant that it may not only seriously affect market price stability, it could even result in price indices being abandoned as a reliable polymer pricing mechanism.”
Turner said that this divergence is of particular concern to converters because it follows a sustained period where margins have been squeezed. “To be faced with an index that is signalling faster downward movements than are actually occurring is a very serious problem.
If sustained, it could result in converters moving away from pegging their prices to an index that has inexplicably moved out of line, as it would impact on the viability of the UK plastic films and film products industry.”