According to the British Plastic Federation (BPF) raw material prices can represent as much as 60% of the selling price of plastics products, which means any price increases in raw materials is passed on to the price of the end product.
BPF director –general Peter Davis said: “All product sectors, be they plastics building products for construction and infrastructure projects, packaging for food distribution or technical components for the automotive and aerospace industries, have been hit and desperately need to pass the increases on to maintain viability.”
The surging price of oil is having an effect on raw plastics prices. As a result of the turmoil in Libya Brent Crude shot up by 2.6% to $105.2 per barrel – believed to be the highest level since the financial crisis hit in 2008.
With this in mind, BPF Recycling Group chair Roger Baynham believes that this could see a higher uptake of recycled plastic being used in its place. He said: “When virgin material prices are as high as they currently are there is additional encouragement for industry to use recycled materials.”
High raw materials coupled with the potential for further demand for recycled plastic could lead to further recycled plastic price increases.
Baynham added: “I think raw materials prices and recycled materials prices are now probably more closely aligned. The recycling sector has been hugely successful in creating volume markets for recycled materials and this bodes well for the future plastics recycling challenges ahead. The market is very strong at the moment, which is good news for the recycling sector but sustainability in the market going forward is key.”