Concerned business mood among European carton makers

A return in volume, reported by the recent quarterly survey taken from ECMA members shows that the European folding carton sector is more confident about business prospects than it was in the middle of 2009, with a modestly optimistic attitude over the past seven quarters. Economic recovery since the summer of 2009 has been reflected in a gradual improvement of order portfolios and for the first time since the final quarter of 2007, a small positive balance of respondents indicated that their order books were above normal. To a large degree, this can be attributed to a significantly positive score on the volume of new orders recorded in the 3rd quarter, coinciding with similar scores for output volumes and stock levels. 
 
Countering this optimism is the persistent tight conditions in raw materials markets, and this is casting a shadow among the leaders in the carton industry. Speaking for ECMA, secretary general Jules Lejeune commented: ‘Cartonboard has been in short supply for some time and has extremely long lead times. The board mills are increasing prices quarterly and, allegedly, there are cases where raw materials agreements between carton board mills and carton converters have been torn up by the suppliers.’
 
Explaining the situation, he added: ‘In this climate, index clauses covering the raw material fluctuations with the customers do not help, as the parameters are generally too wide and adjusted only in the next quarter or half year. The carton converters are expected to bridge the gap for their customers, and this endangers the financial stability of some of our members.’