VDW: Massive energy price increases and impending raw material shortages

The corrugated board industry condemns the war of aggression against Ukraine and expressly supports the sanction measures against Russia. At the same time, however, the industry sees itself in extreme distress due to rapid price increases in the energy sector and impending raw material shortages, signals the Verband der Wellpappen-Industrie e. V. (VDW). Even before the outbreak of war, the market situation had been tense and cost pressure had been higher than ever for months, it said.

"The recently observed dizzying price increases in the energy sector are coming up against a corrugated board industry that has already been confronted with ever new cost increases for many months," warns VDW Chairman Dr. Steffen P. Würth. Last week, wholesale prices for natural gas climbed more sharply than ever before, according to media reports. According to the report, the price for a megawatt hour on the Dutch TTF exchange on March 7 temporarily approached 350 euros. In March 2021, on the other hand, the end-of-day value had always remained below 20 euros per megawatt hour. The corrugated board industry itself, but also the supplying manufacturers of corrugated base paper, are significantly dependent on natural gas as an energy source. "We are already seeing paper mill closures due to gas prices getting out of hand. In combination with the loss of kraftliner imports from Russia, this threatens a shortage of our most important raw material, corrugated base paper - and this assumes a historically high paper price level even before the start of the war," explains Würth. The fuel prices fueled by the war are also hitting the corrugated board industry extremely hard, emphasizes the VDW Chairman. On March 9, the ADAC reported a nationwide average of 2.15 euros per liter of diesel fuel, an increase of 39.4 cents compared to the previous week - corresponding to the biggest price jump ever at German gas stations. VDW members are also already reporting delays in logistics, tighter freight space, and production stops or disruptions in the packaging industry.

Corrugated board transport packaging is indispensable for national and international freight transport. Because the corrugated board industry makes an essential contribution to supplying the population day after day in the food sector alone, it was recognized by the German government as systemically important even in the early stages of the Covid 19 pandemic. "We will continue to do everything we can to make this contribution as best we can and to maintain supply chains. However, the massive price turbulence in the energy market and the threat of raw material shortages in this context fill us with the greatest concern. We must now be able to count on politicians to also act decisively to contain the wartime impact on energy prices. This is the only way to prevent a critical weakening of systemically important sectors of the economy," is Würth's urgent appeal.