European Group Sees Plastics Gaining Value

Production costs, escalating demand put upward pressure on plastic and rubber pricing.

A combination of increased raw materials costs and steady demand will likely keep the cost of plastic and rubber on an upward curve, according to a Belgian plastics organization.

 

The rising cost of base chemicals such as ethylene, propylene and butadiene have already contributed to plastic and rubber becoming 10 to 25 percent more expensive, according to Federplast.be, the Brussels-based Belgian Association of Manufacturers of Plastic and Rubber Articles.

 

High oil prices and anticipated further chemical price increases on the supply side as well as a continued growing use of plastics and rubber in applications with higher added value should keep the upward trend continuing, according to Federplast.

 

“Most plastics have become more expensive by 20 to 30 percent since January 2006,” reports the agency. In a news release, Federplast says it “anticipates further price increases in the third and

fourth quarter [of 2008].”

 

The spot price of naphtha, the oil derivative from which raw materials for the plastics and rubber industry are made, went up in July an additional $100 per ton. Naphtha has doubled in price since January 2007. “As a result of this evolution, higher contract prices were concluded in the third quarter of 2008 for most raw materials,” reports Federplast.

 

“Propylene, ethylene and butadiene became 10 percent, 20 percent and 25 percent more expensive,” says Henri Vliegen, chairman of Federplast. “These are the raw materials from which polypropylene, polyethylene, PVC, high impact polystyrene and synthetic rubbers are made.”

 

“The era of cheap plastics has definitely come to an end,” states Vliegen. Even if “low-value products” such as one-time use retail bags are phased out, other applications are growing. “Plastics and rubber are used increasingly as lightweight parts in vehicles for reduced fuel consumption and higher safety,” Vliegen comments.

 

The higher cost of raw materials is stimulating more recycling, the agency notes. “Belgium already collects 30 percent of its post-consumer plastic [scrap] for recycling into new plastic products and is leading in Europe” says Vliegen. “This positive trend will be confirmed.”

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