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Analysis: The materials price crisis

High raw materials prices, CPC administrator Grant Thornton said yesterday (26 August), were in large part to blame for the business's collapse this week.

This is not the first time the price question has been raised. Indeed, exactly the same problem - essentially, persistently-rising paper prices - was blamed in April for the collapse of the 200 year-old label printer Sessions of York.

In the cartonboard market where CPC operates, suppliers of board have been pushing hard to raise their prices over the last year. The trend has been blamed variously on their own input costs going up, a glut of demand from China and serious pulp supply problems caused by strikes in Sweden at the start of the year and an earthquake in Chile.

Worse, packaging buyers at the big brands and supermarkets are fighting hard not to take the rises. While acknowledging that there is a supply issue, one packaging buyer contacted by Packaging News this week said: "You always hear the same reasons for prices going up - but you never hear about it when those input costs come down."

But piggy in the middle is the printer and converter, many of whom are finding their finances squeezed by every-rising input costs that they simply can't pass on.

Nobody can blame them for that - it's business and they have to do what they can to satisfy the shareholders, pay the bills and invest for the future.

But that won't take away from the fact that the raw materials pricing situation has already claimed at least two big scalps this year in UK packaging - and it could well claim a few more.