Page 35 - FINAT Yearbook 2011

demand for filmic label materials is much higher in Central Europe. This corresponds with the fact that the consumption of filmic self-adhesive labels, with 3.9 m2 per capita is three times higher than in Southern Europe. Here, paper labels hold a more significant proportion of 80% self-adhesive label per capita demand as opposed to 70% in Central Europe.
outlook 2011: concerns about raw materials markets slow down recovery
Looking at the first results for 2011 as reported in the first quarter survey, it appears the year-on-year demand growth has slowed down to a more modest pace of (overall) 3.3% compa- red to the first quarter of 2010. Around this average, year-on- year growth varied between 1.9% in Scandinavia to 5.1% in Eastern Europe. Against a significant slowdown in all other regions, UK and Ireland held up relatively well with a year-on- year growth figure of 4.2%, whilst Central and Southern Europe dropped below the 3% growth figure. As in 2010, filmic label materials outpaced paper labelstock demand with 8.9 versus 3.9% annual growth.
This growth pattern is consistent with the gradual tempering of business optimism among label converters and consumables suppliers as recorded in FINAT’s quarterly Market Trend Survey. From a strongly positive balance of between 40 and 80% respondents indicating that they were more positive about business prospects than the previous quarter at the beginning of 2010, this balance has dropped below 20% a year later. This shows that in spite of the healthy recovery in 2010, there arte still significant concerns about the risks that have remained.
Already in the late summer of 2010, FINAT members expressed concerns about disturbances in the supply chain that were building up pressure on raw materials’ market conditions.
Between January 2010 and January 2011, the benchmark pulp prices increased between 20-25%, while resins for LDPE, PP and PET, crucial to filmic label materials, increased between 25-35%. Polymers necessary for the production of adhesives even increased by 65-75%. Also ink suppliers are being faced with the impact of tight raw materials’ markets and have announced price increases ranging up to 30%. The rise of crude oil, driven by the uncertainties in the Arab world, is further intensifying the pressure, not the least because of the increase of related transportation costs.
cost efficiency a must, new value added opportunities a need
It appears that pressures on raw material prices have continued in 2011. Capacity adjustments have not yet closed the gap in supply versus double digit growth in demand, and the resulting volatility of raw materials prices has been putting pressure on the profitability of packaging and labels suppliers. Not surprisingly, according to the Trends Survey investments in education and product and process innovation are reported to prevail over investments in plants and machinery.
As key drivers for these investments, industry leaders report the need to become lean and streamline supply chains as sources of greater cost and energy efficiency, but also the opportunity to create and raise awareness about new sources of value added benefits for the end-users. For instance by clustering through strategic alliances or acquisitions to ensure a global supply network that is capable of mastering different technologies. Or by acquiring new competences in a world where customers are increasingly outsourcing non core competences outside the scope of R&D and marketing. Or by offering solutions that help the customer to comply with sustainability regulations, and/or dispose of secondary materials in a sustainable as well as economically responsible manner.
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finat Yearbook 2011 |