A recent survey conducted by the IK Industrievereinigung Kunststoffverpackungen e.V. among its 300 member companies shows that the high energy costs have become a threat to the existence of one in five companies in the industry. The association is calling on politicians to take action in order to prevent production shutdowns and job losses.
The mostly medium-sized manufacturers of plastic packaging and films in Germany, like many other energy-intensive industries, have been shocked by the dramatic rise in electricity and gas prices. Some companies have so far been able to avoid a cost increase due to current contracts, On average for the sector, however, electricity costs have doubled since the beginning of the year. However, many companies have to pay 300, 500 and up to 750 per cent higher electricity prices than at the beginning of the year. The current situation is similar for natural gas, where prices are up to 625 per cent higher than at the beginning of the year and here too the price has doubled on average.
The situation looks even more dramatic for next year: In 2023, individual electricity prices are expected to rise by up to 1,200 per cent, with an average increase of around 240 per cent. Most companies also expect natural gas prices to at least double, with the highest estimates also predicting an individual increase of over 1,000 per cent. On average, natural gas prices are currently expected to rise by 250 per cent in 2023.
„Many energy-intensive companies do not yet have an electricity contract for 2023. In view of a tenfold increase in prices on the electricity exchange, it is currently not economically feasible to conclude such a contract, and the companies will inevitably run into the overheated spot market.“
Dr Martin Engelmann, Managing Director of the IK
In addition to the high costs, there is also the planned gas levy, which will further burden companies. „So far, most of our member companies have managed to minimise the to pass on at least part of the drastic rise in energy costs to customers. This is one of the reasons why most companies are not yet affected in their production and delivery capacity. However, this will change in the coming months if energy prices remain at this level or continue to rise,“ warns Engelmann.
Half of the companies are already expecting a negative impact on production in Germany in 2023. The reduction in Russian gas supplies and the threat of a gas shortage in the coming months will also affect the plastic packaging industry: according to the survey, a natural gas supply freeze would have a negative impact on production for two out of three companies, and even a significant impact for almost a third.
The German government's energy cost reduction programme, which is intended to grant energy-intensive companies subsidies totalling five billion euros for the period from February to September 2022, can be used by just under one in five companies in the sector, while for 40 per cent it is out of the question. „In view of exploding energy prices, these subsidies are not even a drop in the ocean,“ criticises Engelmann, pointing out that the subsidies are also linked to strict conditions that many companies in the sector are unable to meet. „The condition that electricity and gas costs must have at least doubled in the current year compared to the previous year is particularly problematic. This is because for many companies, the price shock only comes next year,“ says Engelmann.
The policy demands IK measures in the short term to stop the rise in energy prices. „For too long, the German government has turned a blind eye to the consequences of rising gas prices for the electricity market. We now have a dramatic electricity problem and the government must act to prevent mass production shutdowns and job losses“, demands Engelmann.
In the view of the association, what is needed above all is an internationally competitive industrial electricity price and an industrial natural gas price. The linking of the electricity price to the gas price must be ended. „In the short term, the price of natural gas, which is used in power plants to generate electricity, must also be capped for a limited period of time. It is unacceptable that the industry should finance the windfall profits of electricity producers,“ said Engelmann. The planned gas levy must be capped for industrial customers.
Furthermore, the additional burdens resulting from national fuel emissions trading must be suspended because they no longer make sense in view of current gas prices and are therefore disproportionate. Finally the energy cost containment programme extended beyond September into next year and increased become.
Source: IK Industrial Association for Plastic Packaging
