The value of the Polish packaging sector will amount to around PLN 60 billion in 2022, but despite the market growth, its dynamics is expected to slow down, because the rising prices of energy and raw materials and their lower availability caused by the war in Ukraine translate into even more higher costs and high price pressure, predicts Santander Bank Polska in the report “The packaging industry in 2022. The condition, prospects and impact of the war”.
“The structure of the import exposure of packaging from the markets of Ukraine, Russia and Belarus is similar for Poland and the average for the entire EU. The deliveries were dominated by wooden packaging (mainly pallets) and glass packaging. In the case of Poland, nearly 30% of imports in 2021 The pallets came from the Ukrainian market, and another 15% from the Belarusian market. This may translate into a decrease in the availability of pallets for the transport sector. A similar scenario is already being realized on the German market, where due to the embargo on Russian steel there were no nails for nailing pallets,” said Maciej Nałęcz, Santander Bank Polska sector analyst.
As Santander BP experts emphasize, the price pressure on the cost side is constantly increasing. Both in the case of plastics and cellulose, the dynamics in March (at the EU level) was not as high as in February, but this does not mean that these raw materials are starting to get cheaper. The pace of growth is slowing down, as with each successive month we enter the period of an increasingly higher base from last year. In nominal terms, prices continued to climb in March.
“We see record-high cost pressure, the prices of raw materials for packaging production hit record levels in March, which means that packaging producer price indices in the EU are rising faster than the average for the broad manufacturing sector. This effect is also visible in the price expectations of processors, especially in the segment sensitive to crude oil prices. Nevertheless, after the first shock in March, business climate indices showed a return of optimism in the assessment of order portfolios in April,” added Nałęcz.
At the beginning of 2022, the packaging industry was growing at a rate of nearly 20% per year. However, in terms of volume, the production growth dynamics will be at a single-digit level, incl. due to the very high base from last year. As a result, the increase in prices is currently the predominant driving force behind the growth of companies’ turnover. In terms of value, the largest increases are recorded in the segment of wooden packaging – 40% y / y, which may be related to the decline in imports from Ukraine and Belarus. High growth dynamics is also visible in the segment of glass bottles (around 16% y / y) and metal bottles (around 14% y / y), according to the report.
Santander BP analysts estimate that last year’s sold production of the domestic packaging industry increased by approximately 13-18% y / y, to the level of nearly PLN 52 billion.
“In 2022, the packaging industry will maintain the upward trend, but its structure will change and it will probably be a lower growth than last year. Currently, we expect the dynamics of production sold at around 12-16% y / y, i.e. around PLN 60 billion. given the record high prices of raw materials, we see a high risk of an upward revision of our forecast, especially as cost inflation will probably be the main channel of transmission of the war in Ukraine to the situation of the domestic packaging industry,” summed up Nałęcz.
Source: Santander BP and ISBnews
