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Pandemic brought new customers and opportunities for plastics companies

April 24/2020

MOSCOW (MRC) -- Plastics companies operating in the Klaipeda Free Economic Zone (FEZ) have been fortunate. The impact of the COVID-19 outbreak has so far been limited. In fact, they report increasing demand, the opening up of new product and sales segments, and a renewed sense of worth in the eyes of society, said Sustainableplastics.

The flip side, to date, has been the impact on turnover of falling raw materials and oil prices. Klaipeda. FEZ is the largest plastics hub in the Baltics. It is home to 5 companies active in the plastics industry, who together generated a total turnover of 890m in 2018, or nearly half of Lithuania's total for this industry.

The preliminary data moreover indicate that the 2019 figures are at around the same level: while production output was higher, the 2019 fall in oil prices impacted both other raw materials and, consequently, the pricing of end products.

For these reasons, Klaipeda's plastics companies are reluctant to forecast their 2020 results at this point: while the demand for some current and new segments has increased over the past few weeks, it is still unclear how oil prices and the state of the global economy will develop.

Pack Klaipeda, a manufacturer of egg trays and disposable polystyrene foam dishes, probably has the most positive outlook in today's situation. Curiously, only a year ago the company was uncertain about its future, as the European Parliament approved the single-use plastics (SUP) directive. Today, Pack Klaipeda already has a new polypropylene packaging production line in place that doesn't fall under limitations set by the EP.

The company also has a record number of employees and estimates that it has achieved a 30% annual revenue increase in the first quarter of this year. Last year, according to preliminary data, Pack Klaipeda posted a 3.4% revenue increase, up to 9.2m. The company expects 17% growth this year.

"I believe the COVID-19 outbreak, lockdowns, and quarantines have brought the consumers back to reality when it comes to safety and hygiene that disposable packaging brings to the food industry, says Vytautas Butvilas, the CEO of Pack Klaipeda.

At the same time, the restrictions for the restaurant segment and full hospitals have led to a major jump in demand for PS packaging for takeaway food. We are also seeing some of the customers from the catering industry, who were previously exploring paper laminate packaging and other alternatives, massively returning back to the safe and proved PS solutions. All these factors have contributed to at least a 30% increase in demand in our main markets - Lithuania, Scandinavia, Germany, and Poland.

He believes that this may even impact the sentiments towards the plastics industry by both the society and European institutions. "I think it's naive to believe that we will all return to using ceramic cups and dishes as before the outbreak, said Butvilas. Even today, some European associations believe that the new priorities will be hygiene, safety, circular economy, recycling and only then bans or restrictions.

He does not wish to speculate on whether the EU will review its SUP directive or implementation timelines, instead preferring to prepare for the future. In addition to the new production line that manufactures environmentally friendly and easily recyclable PP packaging, the company has also developed products for new segments such as molten packaging for fresh meat, salads, pastries, food assortments, and healthy takeaway foods.

The company also plans to deliver other hygiene-oriented, environmentally-friendly, and recyclable novelties. Currently, takeaway food packaging (both hot and cold) amounts to around 80% of Pack Klaipeda's portfolio, 10% are egg trays and 10% - other categories. Among the latter, packaging with caps for liquid foods has been growing the most.

As per MRC's ScanPlast report, Russia's estimated PET consumption decreased to about 53,890 tonnes in February 2020, down by 3% year on year. 100,830 tonnes of PET chips were processed in Russia in the first two months of 2020. February PET production in Russia dropped to 45,800 tonnes, down by 5% year on year. Russia's overall PET production fell  in January-February 2020 by 13% year on year.
Author:Anna Larionova
Tags:PET-granulate, PET bottles, PET films, PET preforms, Lithuania.
Category:General News
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