EMEA – US-based packaging company, Sonoco-Alcore has announced plans to implement a price hike of €70 per ton on all recycled paperboard grades sold in the company’s EMEA regions.
The company explains that it is executing price-increase actions on all shipments made on or after the 1st of September 2022 in response to persistently rising costs for European energy. The European energy market is currently plagued by a surge in prices.
Sonoco SON expects to witness uncertainty in the forthcoming winter period and the consequent impact on its supply costs.
The firm’s productivity and cost-control initiatives are not enough to mitigate these costs and it is forced to pass on these costs to customers.
The price hike will be effective for all shipments made on or after Sep 1, 2022
Phil Woolley, Vice President-Paper Europe, said, “In light of the significant increases seen across the recent energy markets, the uncertainty facing the forthcoming winter period and the resultant impact on our supply costs we have no choice but to raise prices accordingly.
“We will continue to monitor the situation closely and will take every action necessary to maintain supplies to our customers. We cannot however rule out further increases or surcharges being required at this stage.”
Raw material and energy costs have been flaring up since the beginning of 2021. Management expects the trend to persist in the current year as well.
Sonoco’s focus on optimizing businesses through productivity improvement, standardization and cost control will aid its performance in the upcoming period.
Price hike driven by increased material cost
Meanwhile, other prominent players in the Containers – Paper and Packaging industry like Sealed Air Corporation SEE, Greif, Inc. GEF and Packaging Corporation of America PKG are also witnessing an unprecedented surge in material costs. These companies are implementing price hikes to offset these impacts.
Limited availability of certain raw materials and global transportation disruptions have been impacting Sealed Air’s supply chain.
The company encountered higher freight costs associated with the sourcing and movement of raw materials due to tight market conditions.
Even though Sealed Air is implementing price increases, the associated timing lag on these increases and formula-based pricing is likely to dent margins.
Packaging Corporation will bear the brunt of increasing energy costs due to higher gas prices, low inventory and high demand.
PKG continues to face unprecedented inflation in most of its operating and converting costs, including higher freight and logistics expenses due to rail service challenges and rail fuel surcharges.
As for Greif, labor shortages and supply chain disruption remain headwinds. Increasing energy, chemical and transportation costs are expected to dent the company’s margins in the near term.
Costs for raw materials used in the paper-making process and old corrugated container costs are expected to increase.
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