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Mintec Global Packaging Index increases 67% year-on-year in October

November 24, 2021

5 mins read

 

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The Global Packaging Mintec Category Index (MCI) maintained an upward trajectory in October, rising by 2% m-o-m to USD 1,882/MT. This represents an increase of 67% compared to the same period in the previous year and 42% since the beginning of the year. The index was primarily driven by a rise in global paper prices, as demand continues to surpass supply in the market.

Plastics Market

The trend seen in the plastics market in recent months reversed in October, with price growth in the US slowing in line with improved supply in the country. On the other hand, EU prices exhibited some stability or upward price movement after prices weakened for approximately four consecutive months.

US production continued to increase following disruptions earlier in the year, with the effects of the recent Hurricanes Ida and Nicholas largely benign. US producers had gradually built up inventories since March 2021 and had released these buffer supplies to mitigate the effects of hurricane season this year. This has been particularly apparent in the US PP market, with the monthly average price easing by 1.7% to USD 3,968/MT in October. Additionally, HDPE and LDPE market prices remained flat m-o-m, at USD 2,690/MT and USD 3,241/MT, respectively. US PET was the only resin that continued its upward trend, as producers successfully pushed through another round of price increases in October. This is due to the supply of the resin remaining relatively tight compared to the US PP and PE. As supply and demand in the US resins market become more balanced, markets that have seen the most significant premiums over the past year will likely see largest decreases in price. This is likely to be most apparent in US HDPE and PP markets.

In contrast, EU plastics prices showed some signs of strengthening in October, as increased energy costs and reduced availability of PTA feedstock in the region fed into higher prices for EU PET. The price increased by 5% m-o-m, to EUR 1,278/MT in October, while EU HDPE and PP stabilised at EUR 1,758/MT and EUR 1,838/MT, respectively. EU LDPE was the only market that continued to weaken, as high supply outweighed the effects of higher input costs, falling 0.6% to EUR 1,768/MT. Imports of all plastics into the EU from the US will likely improve due to increased exportable surplus and relatively cheaper export costs from the US. With energy prices in the EU remaining high, EU polymers prices will likely be higher throughout November.

Metals market

EU and US steel prices continued to soften in October due to lower demand from the automotive industry. On the other hand, the aluminium LME price of the lightweight metal used in packaging has continued to increase on the back of tight supply in the market. Additionally, producers of aluminium packaging are especially concerned about the developments of raw material prices and soaring energy costs.

The US steel hot-rolled coil (HRC) price on the CME decreased in October by 6.9% m-o-m but was up by 143.2% y-o-y to a monthly average price of USD 1,687/MT. The m-o-m decline is due to an improvement in domestic steel production, coupled with a slowdown in demand. HRC prices are likely to remain stable in the near term, with modest downward pricing corrections to continue in Q4 2021, when demand tapers during the holiday season and in response to supply chain disruptions while the import supply rises. In October, the Northern Europe steel HRC price decreased by 8.3% m-o-m and increased by 111.2% y-o-y to EUR 1,038/MT due to lower demand from the automotive industry, higher production rates of domestic HRC and competitive offers from Central European mills. However, market activity is expected to recover in November when distributors start to restock material for Q1 2022.

The LME aluminium (3-month) price continued an upward trend seen since mid-2020, rising to a record high of USD 2,970/MT, up 4.1% m-o-m and 63.2% y-o-y in October, supported by global supply tightness and soaring demand. China, the world’s largest aluminium producer, has substantially restricted supply to reduce carbon emissions. In addition to high freight costs, gas prices in Europe and Asia are at record highs, thus supporting aluminium prices (aluminium is power intensive and requires gas for production). Additionally, a military coup in Guinea put further pressure on aluminium prices. Guinea has the world’s largest bauxite reserves, used to produce aluminium oxide, and is one of China’s major suppliers. US and Europe aluminium prices will likely be sustained for several months due to the Russian export tax (15%) on primary aluminium.

Paper market

The global paper packaging market continued to trend upwards in October 2021 compared to the previous month, on the back of elevated raw material prices. Europe and Asia face severe electricity shortages, and the demand for finished paper from other parts of the world is strengthening. With the increased cost of freight, labour, energy and other spares and consumables, the conversion cost of the paper packaging has increased and may continue to rise in the short term.

The October average price of French kraftliner 175gr increased by 6% m-o-m and by 45% y-o-y to EUR 947/MT as demand continues to outstrip supply. Demand from the e-commerce sector continues to drive the market. Sourcing kraftliner continues to be challenging, and the situation might intensify further in Q4 2021 due to the traditionally busy period. Several major maintenance stoppages were completed in September, with others taking place in October/November. In addition, high energy prices, material delays and high freight costs have supported kraftliner prices. Several European kraftliner manufacturers have announced a EUR 30-50/t price hike for deliveries of brown and white-top kraftliner in November/December.

The French testliner 2 average price increased in October compared to September, up 2.6% m-o-m and 53.8% y-o-y, at EUR 800/MT, primarily driven by booming demand from the e-commerce sector and high prices for recycled corrugated case material. For deliveries in November 2021, more price hikes for brown recycled paper are expected, at around EUR 50/t. Further price increases for white-top testliner are planned with a slight time lag.

The October average price of GD2 increased by 7.4% m-o-m and by 28.7% y-o-y, to EUR 1,165/MT, driven by brisk demand and high prices for recovered paper. The October average price of EU GC2 also increased by 5.4% m-o-m and by 11.8% y-o-y, to EUR 1,565/MT, due to rising pulp and wood costs and the current logistic disruptions. Producers are calling for further mark-ups for deliveries from November onwards. Manufacturers plan to invoice special surcharges of EUR 30-100/t due to rising raw material costs, high energy prices and logistics.

Topics: Other
Mintec Team
Mintec Team

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