IK: Record rise in energy and raw material prices jeopardize production - plastics packaging industry calls for relief

12.01.2022 08:16

The extreme price pressure on electricity and natural gas and the persistently high raw material prices mean that one in four plastic packaging and film manufacturers has to turn down orders. By 2022, the industry expects electricity costs to rise by a further 28%. Many companies see their existence threatened by this development. As stated in a press release from the IK Industrievereinigung Kunststoffverpackungen e.V. (IK), the industry is calling for immediate aid measures from the new German government.

According to a recent survey conducted by the IK among its members, the cost of industrial electricity for manufacturers of plastic films and packaging averaged 16.7 cents/kWh last year. For 2022, the industry expects a further increase to an average of 21.4 U.S. cents/kWh. "The dramatic rise in electricity and gas prices poses an existential threat to many of our member companies," warned Dr. Martin Engelmann. Dr. Martin Engelmann, managing director of the IK Industrievereinigung Kunststoffverpackungen, also has foreign competitors in mind. "An increase in electricity cost intensity of more than 25% per year is not sustainable even for a very healthy company. Today, 27% of our members have to turn down orders for cost reasons. It's not about maximizing profits, it's only about cost-covered production!" "Passing on high costs to customers is usually only a partial success.
"In view of the skyrocketing energy prices, the new German government must not ignore the economic consequences," Engelman demanded. Just a few weeks ago, the European Commission made it clear that manufacturers of plastic films and packaging are strongly affected by the risk of carbon leakage. "Therefore, the German government should use leeway as soon as possible and create regulations to protect domestic industry from exorbitant energy prices," Engelman said.
High cost pressure limits necessary investments in climate protection and circular economy
High energy prices are also the main reason for suspending investments in more energy-efficient production processes and increasing the use of recycled materials. "High cost pressure has led to lower profit margins. As a result, many companies simply lack the funds to make urgently needed investments in climate protection and the circular economy," Engelmann criticizes.
Plastics supply in the industry remains very tight: 43% of the companies surveyed rated December 2021 as poor or very poor. 29% even expect a further deterioration in the first quarter of 2022. This has an impact on the companies' production, he says: 32% report restrictions in their ability to supply on a medium or significant scale.

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