German plastic trade association Industrievereinigung Kunststoffverpackungen has predicted a "dramatic" profit decline for the fourth quarter for plastic packaging manufactures amid high raw material costs.
Jumps in raw material prices were "occurring more and more quickly and frequently," it said in a statement Monday, adding that these were difficult to pass downstream and meant a considerable increase in margin risk for plastics packaging manufacturers.
According to Platts data, ethylene monthly contract prices in Europe hit a record high of Eur1,345/mt ($1,739/mt) FD NWE in April, before collapsing to Eur1,035/mt FD NWE in July, a 22-month low. Since then, however, the price has crept back up to Eur1,290/mt in October.
"Despite this economic downturn, manufacturers of plastics packaging were confronted with strongly increasing raw material prices. Supply shortages occurred regularly, entailing short notice delivery cancellations. Overall, this development was met with little understanding amongst the customers of IK members," the association said.
Germany's chemical output in August was 1.8% weaker than the same month last year though grew 1.0% against July, calendar-adjusted data from federal statistics agency Destatis showed in late September.
The eurozone crisis is increasingly hitting the German economy, the leader in Europe, data suggested late September as German business confidence fell for the fifth month in a row to the lowest level since February 2010.
The Ifo economic institute's closely watched business climate index dropped to 101.4 points in September from 102.3 points in August, disappointing analysts who had expected an unchanged reading.
