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Polymer rate hike to hit packed food

Packaging costs are expected to rise substantially, which could push up the prices of branded consumer products.
None | By HT Correspondent, Mumbai
UPDATED ON JUN 06, 2008 10:33 PM IST

There is one more reason why your grocery bill may shoot up in the next few days. Packaging costs are expected to rise substantially, which could push up the prices of branded consumer products.

Prices of polymers, which are used for producing packaging goods, have gone through the roof in the past month. Reliance Industries—the largest player in the industry with a market share of almost 70 per cent—has gone in for a substantial hike in the prices of polymer products.

While Reliance Industries declined to give details about the price rise, industry sources claim the country’s largest petrochemical company has hiked prices by five times in the last 30 days.

A Reliance Industries spokesperson did not want to comment. Prices of polyethylene and polypropylene—the most widely used polymers—have been witnessing a major increase. Reliance Industries has increased the price of polyethylene by 12.5 per cent from Rs 72 per kg to Rs 81 in 35 days starting May 1, 2008. In the same period, polypropylene prices have moved from Rs 70.50 to Rs 87 per kg, a rise of 23.4 per cent, according to industry sources.

Reliance Industries’ price hikes are in line with rise in global polymer prices. With crude oil prices touching $130 a barrel, prices of petrochemical products like polymers, which are made out of items processed from crude oil, have also been going up.

The plastics industry, which makes the bulk of packaging material, is feeling the heat.

“The situation looks gloomy as of today and some, if not all, of the abnormal price hike by Reliance Industries will ultimately be passed on to end users,” said Gautum Gandhi, President, Organisation of Plastics Processors of India.

The packaged food industry, too, is considering a price hike on account of the rise in packaging costs. Prices of packaging material have recently risen by about 40 per cent. “Packaging on average constitutes 25-30 per cent of the total product cost. There is no denying the fact that the rise in packaging material inputs will have a big impact,” said Mayank Shah, Group Product Manager, Parle Products.

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