2020 The Shape of Things to Come
2020 The Shape of things to come
“Forecasting is always difficult, particularly about the future” (Neils BOHR)
Nevertheless, it’s budgeting time once again and by far the most pertinent questions we are asked every
year at this time are;
What is going to happen to film prices?
Do we foresee any problems with supplies?
But, this year we also have
‘What are we doing to address the ‘plastic problem’?
With Brexit on the horizon (or not) forecasting supply side changes for 2020 is particularly difficult. This is because added to the many normal variables we encounter year by year we have the desire by many customers to change to more environmentally acceptable materials from standard plastic films. In addition, they want packaging films that will avoid the proposed plastics packaging tax to be introduced in 2022.
Whilst we cannot have any specialist insights into all of these variables, we can offer an informed insight
- Exchange rates
We calculate packaging film imports into the UK as being between £800 million and £1 billion.
The majority of this trade is in Sterling, thus, the outcome of the Brexit negotiation is particularly
relevant to our business sector. Various forecasters see the Pound as high at €1,40 if
negotiations progress well and approaching parity should they fail. Against this background any
forecast must have caveats. However, since the original vote we have seen Sterling fluctuate
from between €1,16 to €1,06.
During this time we have held prices stable by judicious purchases of bulk film prior to Sterling
falling, coupled with forward buying of currency and price support from our overseas suppliers.
As a consequence, we believe prices can hold stable, certainly until mid-year, 2020, at which
time the political situation should be much clearer (we hope). (Anyone wishing to place bulk
orders to July, please just ask).
- Oil prices
Here again currency fluctuation has a major part to play. Over the last year, we have seen oil
price fluctuation between $80 to $40 per barrel. Whilst the value of Sterling against the
Dollar obviously affects UK costs. In these circumstances, polymer prices have fluctuated
significantly less than could have been anticipated. This has been simply due to weakening
demand for Polymers, particularly from the automotive industry.
We also believe the current ‘War on Plastic’ will inhibit Polymer price growth, due to demand, and
reductions in some plastic products. Thus, in the absence of any major increase in the conflict in
the Middle East we anticipate continued price stability from Polymer.
Packing film supply is a Worldwide industry. Therefore, the growth in new film manufacturing
facilities in Turkey and Eastern Europe (400,000 tonnes) reinforces our view that despite Brexit
the UK is not a market the Europeans film manufacturers will not easily risk losing. Amazingly,
China has 20 NEW film production facilities either in planning or construction with a plated
capacity of over 600,000 tonnes!!
- Plastic Pollution - New films for 2020
‘Environmental films’ is probably an inept description of the new films being developed to
address the problems of plastic pollution. Many of these films are UK centric as Europe has, in
many cases, recycling facilities for both PP & PE. So, whilst the following films are, by definition,
still Biaxal they are either easier to recycle in the existing waste streams or alternatively include
recycled content in their structure.
This film is being developed to replace OPP in flowrap and FFS applications. Whilst still in the
development phase we have seen significant improvements in the latest trials undertaken and
as a consequence are confident that these films will be a useful addition to a wide range of food
Their major environmental benefit is that they can be recycled with other PE products such as
plastic bags. This is particularly helpful where the supermarkets are providing plastic waste
return facilities and/or deposit return schemes.
OPP with 30% recycled content
We have trialled this film successfully across a full range of current OPP applications. Currently it
consists of post-industrial recycled content, allied to virgin polymer. But where collection and
cleaning facilities do exist, these will eventually enable the use of post-consumer recycled
The benefit of these films is that they may avoid the proposed plastic tax as they comply with
the requirement for 30% recycled content and can be used in food contact applications
BOPET with 70% recycled content
These films have up to 70% post-consumer PET content within their structure. This material
could be recycled with PET bottles through the supermarket packaging collection schemes,
which at some point are likely to be supported by a deposit return scheme. These films will also
not be subject to the proposed packaging tax.
Overall, we anticipate the current price stability to be maintained. We believe, at least until mid-year 2020.
Currency movement is most likely to be the biggest driver of price changes in either direction as
the volume of oil from fracking should contain Polymer prices. This over supply, along with the increases
in Worldwide film manufacturing capacity should contain raw material costs. One ‘wild card’ must be
the cost of plastic PRN’s. In 2019, they increased by up to 500% at one stage, resulting in a plastic waste
tax of £300 million in the year.
Indonesia and Vietnam are both considering banning or reducing imports of plastic waste. Should this
happen, the cost of PRN’s could well reach £1000, 400% each, above current levels. As a consequence,
the price of all packaging films would increase, as the total cost to the plastic packaging industry would
be £1 billion – we shall see.
As ever I welcome your views on any of the points made and why not join me on LinkedIn for more
regular contact. https://www.linkedin.com/in/barry-twigg-3a440b53/