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2022 Film Prices, Production & Profits

With the price of oil now at over $100 per barrel, it’s difficult to believe that in 2020, the average price was $40 per barrel, with a low of just $11.26 cents!! Meanwhile, film prices have increased by circa 50% dependent upon the grade over the same period.

So, why is that? Whilst there has always been a disconnect between oil and film prices, in 2022, this disconnect is very much on the upside. This week, we have had 4 film suppliers Plastchim (Bulgaria), Flex (Hungary), Innovia (UK), and TI (UAE) all notifying us of more film price increases, along with a 43% increase in gas prices.  

At the moment, those suppliers from Eastern Europe are not prepared to quote any prices for delivery, simply those ‘prices prevailing on despatch’. Meanwhile, Innovia have simply added an energy ‘surcharge’ of €240 from 1st March. This hardly gives time for negotiation as the letter was sent 2nd March! We have also been alerted to a further extension in lead times of 8-10 weeks for delivery of some specialist film grades.

This increase in lead times is interesting. Whilst we are all aware of the increase in energy prices on polymer and film manufacturing, it’s difficult to see how the current geo-political climate can lead to increased demand for packaging films. Therefore the major influx of orders to which the suppliers refer may be due to panic buying. There is no doubt Sibur, the Russian film producer, has developed a presence in film exports to Eastern Europe. However, Russia is still a net importer of films and polymers and thus, it’s difficult to reconcile increased demand for packaging films due to the current crisis. Indeed, according to Google, Russia imports some 9 million tonnes of polymer, albeit this will not all be used for film manufacture. Therefore, this polymer should be looking for a new home.

That said, there is obviously more chaos developing in logistics and shipping around the world, which will inevitably result in some delays in deliveries and whilst it seems obvious there will be long term effects from increased energy and oil prices, presumably the recent improvements in container availability and shipping will resume in the near future.

Meanwhile, unfortunately we can undoubtedly expect more film price increases. Indeed, Martin Brudermueller, Chairman of BASF, declared when announcing their financial results last week ‘We will implement further substantial price increases to pass on higher costs and Improve our Margins’. This is despite a 2021 increase of 118% in BASF profits to their highest level for 10 years, with a commensurate increase in margins of 25%.

Obviously Mr Brudermueller feels he needs to make up for the difference between his 118% profit increase and those of Dow @ 300%, Exxon 200%, Lyondell Basell 400% and Borealis 400%. All these extra profits were made in 2021 against the background of the chaos created by Covid. It is unlikely therefore that these $ multi-billion Petrochemical giants will change their profit enhancement policies for 2022.  


In January, we anticipated that as the effects of the Covid crisis receded, then the second half of 2022 would bring price stability and possibly even film price reductions due to a much more stable trading environment. As a consequence, we planned to destock and advised our customers to follow our example. Unfortunately, it now appears that price stability won’t happen. Our priority right now is to maintain and / or increase our stock levels at the best prices we can get. Whilst we believe our film supply partners will continue to support us as best they can, it is obvious that the polymer suppliers will continue to exploit the situation to their own advantage. Indeed, when the Chairman of BASF, the largest chemical company in the world with sales of $78.6 billion, states unequivocally ‘We will be implementing further substantial price increases’, and ‘improving our margins’. This is a clear message to both ourselves and their competitors of their profit enhancement strategy.

We are all becoming more used to supply problems in a volatile trading climate and all the indications are these conditions will last for many more months. These problems will be due, in part, to the actions of the major Petrochemical companies who control the worlds polymer supplies.

As ever, we shall see.

Meanwhile, I would welcome your views on any of the items raised and I invite you to join me on LinkedIn for more regular updates.




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