European flexible tubes industry threatened by spurting raw material prices

In the first half of 2010 the European flexible tubes industry is enjoying up to two-digit increases in order income, depending on the requested tube diameters and tube types.

So etma members are rather confident that by the end of the year 2010 tube deliveries will have exceeded 10 billion units again. In some European countries even quantities comparable to the good 2008 results might be possible. At present production capacities are well utilized showing a clear trend towards short-term orders with smaller lot sizes which requires an enormous flexibility from tube producers.

However, the volume-wise positive development in 2010 is accompanied by huge raw material price hikes which threaten the industry. From June 2009 to June 2010 oil prices increased by 23 percent and aluminium prices by 40 per cent. The prices of the plastic materials PE-LD and PP rose by 53 and 64 per cent respectively and that of paper by even 77 per cent. These price rises have already induced many haulage contractors, lacquer, printing ink, closure and cardboard producers to raise their quotations which are exerting big pressure on the European tube industry. On top of this some customers are asking for extremely long payment terms which are causing great difficulties for tube producers’ liquidity.

Martin Hintz, President of the european tube manufacturers association (etma), comes to the point: “etma members mastered the 2009 crisis thanks to productivity improvements, intelligent working time systems and the innovative spirit of the industry. The raw material price developments in the last twelve months are now drastically squeezing the European tube producers’ margins. This is a major problem for the industry because in any business reasonable margins are a precondition for securing innovativeness, sustainable production and necessary investments in new technologies.”